At a company, 20 employees are making contributions for a retirement gift. Each of the 20 employees is choosing how many dollars to contribute from the interval [0,10]. The manager of these 20 employees announces that she will contribute d dollars for every dollar that an employee contributes. The payoff to employee i who makes contribution of x; dollars is b;(1+ d)x; – xi, where b; > 0. Assume that d = 2, b; = 0.25 for i = 1,2, ..., 10, and b; = 0.5 for i = 11, 12, ..., 20. What is contribution level of the manager in the Nash equilibrium? Numerical answer
At a company, 20 employees are making contributions for a retirement gift. Each of the 20 employees is choosing how many dollars to contribute from the interval [0,10]. The manager of these 20 employees announces that she will contribute d dollars for every dollar that an employee contributes. The payoff to employee i who makes contribution of x; dollars is b;(1+ d)x; – xi, where b; > 0. Assume that d = 2, b; = 0.25 for i = 1,2, ..., 10, and b; = 0.5 for i = 11, 12, ..., 20. What is contribution level of the manager in the Nash equilibrium? Numerical answer
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![At a company, 20 employees are making contributions for a retirement gift. Each of the 20 employees is choosing how many
dollars to contribute from the interval [0,10]. The manager of these 20 employees announces that she will contribute d dollars
for every dollar that an employee contributes.
The payoff to employee i who makes contribution of x; dollars is
b;(1+d)x; – Xi, where b; > 0.
Assume that d = 2, b; = 0.25 for i = 1, 2, ..., 10, and
b;
= 0.5 for i = 11, 12, ..., 20.
What is contribution level of the manager in the Nash equilibrium?
Numerical answer](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F7c0e670a-2918-48e3-8b61-1204d22c3f04%2Fddbeb8a4-0d10-4934-860b-6097fc1958d5%2Fgkbq0mw_processed.png&w=3840&q=75)
Transcribed Image Text:At a company, 20 employees are making contributions for a retirement gift. Each of the 20 employees is choosing how many
dollars to contribute from the interval [0,10]. The manager of these 20 employees announces that she will contribute d dollars
for every dollar that an employee contributes.
The payoff to employee i who makes contribution of x; dollars is
b;(1+d)x; – Xi, where b; > 0.
Assume that d = 2, b; = 0.25 for i = 1, 2, ..., 10, and
b;
= 0.5 for i = 11, 12, ..., 20.
What is contribution level of the manager in the Nash equilibrium?
Numerical answer
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