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Consider an industry with two firms that are simultaneously deciding whether to make costly safety investments such as sprinkler systems in a plant or escape tunnels in a mine. Unlike the firms, potential employees do not know how safe it is to work at each firm. Employees only know how risky it is to work in this industry. If only Firm 1 invests, workers do not know that safety has improved at only Firm 1's plant. Because the government's accident statistics for the industry fall, workers realize that it is safer to work in the industry, so both firms pay lower wages. The profit matrix shows how the firms' profits depend on their safety investments. Could cheap talk lead both firms to invest in safety? Why or why not? Cheap talk A. can help the firms settle on a single equilibrium because the communication can change the payoffs. B. cannot help the firms settle on a single equilibrium because the firms have a dominant strategy. C. can help the firms settle on a single equilibrium because the firms can use the communcation to make binding agreements. D. cannot help the firms settle on a single equilibrium because the communication occurs after the firms have made their investment decisions. E. can help the firms settle on a single equilibrium because the firms have an incentive to be truthful. What is the minimum fine that the government could levy on firms that do not invest in safety that would lead to a Nash equilibrium in which both firms invest? It would be a Nash equilibrium for both firms to invest if the government levied a fine for not investing of at least! (Enter your response as a whole number.)

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