Return to the game of Monica and Nancy in Exercise S10 of Chapter 5. Assume that Monica and Nancy choose their effort levels sequentially instead of simultaneously. Monica commits to her choice of...

Return to the game of Monica and Nancy in Exercise S10 of Chapter 5. Assume that Monica and Nancy choose their effort levels sequentially instead of simultaneously. Monica commits to her choice of effort first, and on observing this decision, Nancy commits to her own effort.

(a) What is the subgame-perfect equilibrium to the game where the joint profits are 4m + 4n + mn, the effort costs to Monica and Nancy are m₂
and n₂, respectively, and Monica commits to an effort level first?

(b) Compare the payoffs of Monica and Nancy with those found in Exercise S10 of Chapter 5. Does this game have a first-mover or a second-mover advantage? Explain.