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 = 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, SB, write down player A?s utility from choosing yes effort.

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 = 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, SB, write down player A?s utility from choosing yes effort.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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parts a and b
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