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Crises and reform. Consider the model in Section 12.7. Suppose, however, that if there is no reform, workers and capitalists both receive payoffs of −C rather than 0, where C ≥ 0.
(a) Find expressions analogous to (12.37) and (12.38) for workers’ proposal and the probability of reform.
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Write My Essay For Me(b) Define social welfare as the sum of the expected payoffs of workers and capitalists. Show that an increase in C can raise this measure of social welfare.
