2. Two people, A and B, are deciding whether to put effort into producing a public good or not. Each person, i, can either choose no effort (s; = 0) or yes effort (s; = 1). The total public good produced is G = SA + SB. The cost of doing no effort is 0. The cost of doing yes effort is 1.5. The payoff to a player is the total public goods provided (G) minus her personal costs. (a) Given a choice by player B, SB, write down player A's utility from choosing no effort Given a choice by player B, SB, write down player A's utility from choosing yes effort. (c) Comparing these two utilities, write down player A's best response. Noticing that player B's problem is identical to player A's, what is the unique Nash equilibrium of this game?

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
icon
Related questions
Question

Hi, can you help me with part A please?

2. Two people, A and B, are deciding whether to put effort into producing a
public good or not. Each person, i, can either choose no effort (s; = 0) or
yes effort (s; = 1). The total public good produced is G = SA + SB. The
cost of doing no effort is 0. The cost of doing yes effort is 1.5. The payoff
to a player is the total public goods provided (G) minus her personal costs.
(a) Given a choice by player B, SB, write down player A's utility from
choosing no effort
Given a choice by player B, SB, write down player A's utility from
choosing yes effort.
(c) Comparing these two utilities, write down player A's best response.
Noticing that player B's problem is identical to player A's, what is
the unique Nash equilibrium of this game?
Transcribed Image Text:2. Two people, A and B, are deciding whether to put effort into producing a public good or not. Each person, i, can either choose no effort (s; = 0) or yes effort (s; = 1). The total public good produced is G = SA + SB. The cost of doing no effort is 0. The cost of doing yes effort is 1.5. The payoff to a player is the total public goods provided (G) minus her personal costs. (a) Given a choice by player B, SB, write down player A's utility from choosing no effort Given a choice by player B, SB, write down player A's utility from choosing yes effort. (c) Comparing these two utilities, write down player A's best response. Noticing that player B's problem is identical to player A's, what is the unique Nash equilibrium of this game?
AI-Generated Solution
AI-generated content may present inaccurate or offensive content that does not represent bartleby’s views.
steps

Unlock instant AI solutions

Tap the button
to generate a solution

Recommended textbooks for you
ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
Economics
ISBN:
9780190931919
Author:
NEWNAN
Publisher:
Oxford University Press
Principles of Economics (12th Edition)
Principles of Economics (12th Edition)
Economics
ISBN:
9780134078779
Author:
Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:
PEARSON
Engineering Economy (17th Edition)
Engineering Economy (17th Edition)
Economics
ISBN:
9780134870069
Author:
William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:
PEARSON
Principles of Economics (MindTap Course List)
Principles of Economics (MindTap Course List)
Economics
ISBN:
9781305585126
Author:
N. Gregory Mankiw
Publisher:
Cengage Learning
Managerial Economics: A Problem Solving Approach
Managerial Economics: A Problem Solving Approach
Economics
ISBN:
9781337106665
Author:
Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:
Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-…
Managerial Economics & Business Strategy (Mcgraw-…
Economics
ISBN:
9781259290619
Author:
Michael Baye, Jeff Prince
Publisher:
McGraw-Hill Education