6. Free-riding Scenario: You and 9 other people have an endowment of 20 Euros. Everybody can contribute up to the full endowment of 20 Euros to a common fund. The contributions to this fund will be doubled and then redistributed equally among you and the other 9 people. (Hint: use an Excel spreadsheet to arrive at answers!) a. Assume everybody, including yourself, is behaving socially, that is, contributing so as to maximize the total payoff. How much will each person contribute? What will be the total payoff? How much will each person take away individually, including yourself? b. Assume everybody else is behaving socially, but you are behaving selfishly, looking out only for yourself. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? c. Assume everybody else is behaving selfishly, but you are behaving socially. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? d. Assume everybody, including yourself, is behaving selfishly. How much will each person contribute? What will be the total payoff? How much will each person take away individually?

6. Free-riding Scenario: You and 9 other people have an endowment of 20 Euros. Everybody can contribute up to the full endowment of 20 Euros to a common fund. The contributions to this fund will be doubled and then redistributed equally among you and the other 9 people. (Hint: use an Excel spreadsheet to arrive at answers!) a. Assume everybody, including yourself, is behaving socially, that is, contributing so as to maximize the total payoff. How much will each person contribute? What will be the total payoff? How much will each person take away individually, including yourself? b. Assume everybody else is behaving socially, but you are behaving selfishly, looking out only for yourself. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? c. Assume everybody else is behaving selfishly, but you are behaving socially. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? d. Assume everybody, including yourself, is behaving selfishly. How much will each person contribute? What will be the total payoff? How much will each person take away individually?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

6. Free-riding Scenario: You and 9 other people have an endowment of 20 Euros. Everybody can
contribute up to the full endowment of 20 Euros to a common fund. The contributions to this fund will be
doubled and then redistributed equally among you and the other 9 people. (Hint: use an Excel spreadsheet
to arrive at answers!)
a. Assume everybody, including yourself, is behaving socially, that is, contributing so as to maximize
the total payoff. How much will each person contribute? What will be the total payoff? How much
will each person take away individually, including yourself?
b. Assume everybody else is behaving socially, but you are behaving selfishly, looking out only for
yourself. How much will you contribute? How much will you take away? What will be the total
payoff? How much will the others get?
c. Assume everybody else is behaving selfishly, but you are behaving socially. How much will you
contribute? How much will you take away? What will be the total payoff? How much will the others
get?
d. Assume everybody, including yourself, is behaving selfishly. How much will each person
contribute? What will be the total payoff? How much will each person take away individually?

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