(public good) Consider a sequential public good problem. A team of 5 players can build a bridge that costs 3 dollars to build. Assume that the values that each player assigns to having a bridge are given by v₁ = 1, V₂ = 1, V3 = 1, V4 = 1.2, v5 = 1.6. Assume that player U2 1 goes first publicly contributing as much or as little as she wants. Let ci be player i's contribution Then player 2 goes, making a public contribution. Then player 3, then 4, then 5. So when player i makes her contribution decision she has observed the contributions of players ji. If the total of contributions exceeds 3 then the bridge is built and any surplus is burnt. If the contributions total less than 3 the bridge is not build and the contributions are burnt. So players payoffs are given by vi- c; if Σ1Ci ≥ 3 and -ci if Σ1C; <3 (a) Find a Subgame perfect Nash equilibrium.

(public good) Consider a sequential public good problem. A team of 5 players can build a bridge that costs 3 dollars to build. Assume that the values that each player assigns to having a bridge are given by v₁ = 1, V₂ = 1, V3 = 1, V4 = 1.2, v5 = 1.6. Assume that player U2 1 goes first publicly contributing as much or as little as she wants. Let ci be player i's contribution Then player 2 goes, making a public contribution. Then player 3, then 4, then 5. So when player i makes her contribution decision she has observed the contributions of players ji. If the total of contributions exceeds 3 then the bridge is built and any surplus is burnt. If the contributions total less than 3 the bridge is not build and the contributions are burnt. So players payoffs are given by vi- c; if Σ1Ci ≥ 3 and -ci if Σ1C; <3 (a) Find a Subgame perfect Nash equilibrium.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. 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; = 0). The total public good produced is G = max{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. i. Given a choice by player B, SB, write down player A's utility from choosing no effort. Given a choice by player B, SÅ, write down player A?s utility from choosing yes effort. 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? In four sentences or less, explain why the Nash equilibrium represents a social dilemma and how this relates to the idea of positive externalities.
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BN8.1 Public Goods are both Non-Rival & Non-Exclusive. Explain each of these Terms & Show how they differ from each other.
5. Common resources and the tragedy of the commons Felix, Larry, and Raphael are trappers who live next to a recreational hunting area that is open to trapping; in other words, anyone is free to use the recreational hunting area for trapping. Assume that these men are the only three trappers who trap in this recreational hunting area and that the recreational hunting area is large enough for all three trappers to trap intensively at the same time. Each year, the trappers choose independently how often to trap; specifically, they choose whether to trap intensively (that is, to set several traps and hunt long hours, which hurts the sustainability of the recreational hunting area if enough people do it) or to trap nonintensively (which does not hurt the sustainability of the recreational hunting area). None of them has the ability to control how much the others trap, and each trapper cares only about his own profitability and not about the state of the recreational hunting area.…
Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
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