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.

Principles of Economics, 7th Edition (MindTap Course List)

7th Edition

ISBN:9781285165875

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter11: Public Goods And Common Resources

Section: Chapter Questions

Problem 2PA

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