a) Identify the Nash Equilibrium for the "environmental game" for each of these two versions of the payoff matrix. Briefly explain your reasoning. b) Which version of the payoff matrix represents the case in which governments put more weight on domestic producer profits than on domestic consumer wellbeing (perhaps because a portion of the consumer costs are borne by the other country)? Briefly explain how you know, with reference to the numerical payoffs given. c) Identify a “real-world" case in which two or more countries have attempted to achieve a cooperative outcome that Pareto dominates a Nash equilibrium in which neither country

a) Identify the Nash Equilibrium for the "environmental game" for each of these two versions of the payoff matrix. Briefly explain your reasoning. b) Which version of the payoff matrix represents the case in which governments put more weight on domestic producer profits than on domestic consumer wellbeing (perhaps because a portion of the consumer costs are borne by the other country)? Briefly explain how you know, with reference to the numerical payoffs given. c) Identify a “real-world" case in which two or more countries have attempted to achieve a cooperative outcome that Pareto dominates a Nash equilibrium in which neither country

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following pure exchange, Edgeworth box economy. There are two consumers, Adam and Mark, and two goods. Adam has an endowment of 7 units of good 1 and 3 units of good 2 (i.e. wadam = (7, 3)), while Mark has an endowment of 3 units of good 1 and 7 units of good2 (wmark$ = (3,7)). The consumers' utility functions are given by: Uadam = Xa1 + Xa2 and Umark = min{xm1, Xm2) where x¡1 is the consumption of good 1 by consumer (i = adam, mark) (a) Find the set of Pareto optimal allocations of this economy (b) Find the Walrasian equilibrium.
In experiments in which participants voluntarily contribute to the provision of a public good, we often find a reduction in contributions in successive rounds of the experiment. We can explain this as Group of answer choices Evidence of participants reaching satiation and not wanting such high levels of the public good. Evidence of participants working out the Nash equilibrium outcome of the voluntary contribution game. Evidence of participants reducing cooperation to punish free riding. Evidence of participants learning how to play the game more effectively.
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