Scenario: Consider a Trust Game Between an Employer and a Worker

Scenario: Consider a trust game between an employer and a worker. The employer will either trust or not trust the worker. If the employer trusts the worker, she will hire him and then the worker would either work faithfully for the employer, or shirk in his work. The diagram below shows their respective payoffs in different situations.

-Refer to the scenario above.If the interaction between the employer and the worker is to be repeated for many periods in future,the equilibrium of this game is ________.

A) when the employer doesn't trust the worker
B) when the employer trusts the worker, and the worker works faithfully
C) when the employer trusts the worker, and the worker shirks
D) nonexistent

Correct Answer:

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