20 employees are making contributions for a retirement gift. Each of the 20 employees is choosing how ribute from the interval [0,10]. The manager of these 20 employees announces that she will contribute r that an employee contributes. employee i who makes contribution of x; dollars is b;(1+d)x; – x;, where b; > 0. I= 2, b; = 0.25 for i = 1, 2, ..., 10, and = 11, 12, ..., 20. st contribution level of any employee i for i = 11, 12, ..., 20. rer

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter7: Uncertainty
Section: Chapter Questions
Problem 7.7P
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Qia
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; – x¡, 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 the best contribution level of any employee i for i = 11, 12, ..., 20.
Numerical answer
Transcribed Image Text:Qia 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; – x¡, 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 the best contribution level of any employee i for i = 11, 12, ..., 20. Numerical answer
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