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?

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

See similar textbooks

Similar questions

Subject - advanced math Frank's loan pay off is to be made in two installments: $2500 in a year, and $3500 in 3 ½year. After talking to his loan officer, it was decided that he could pay both installments in 20months. How much would he pay if his loan is processed at 7 ¼ simple interest. Draw a timelineto illustrate your solution.
how to calculate future value
What is a transfer payment?
What is the 4p ( Product, price, place, promotion) of caribou coffee ?
$200 is not the correct answer. Please credit my account for the wrong answer provided.