There are 2 players. Each has an endowment of 10 dollars and chooses how many dollars to contribute to a public pool. Call x₁ and x₂ the contributions of player 1 and player 2, respectively. If x₁ + x₂ ≥ 5, then players 1 and 2 receive a payoff of 10 - x₁ + 1 and 10 − x₂ + 1, respectively. Otherwise they receive a payoff of 10 - x₁ and 10 - x2, respectively. a) Find a Nash equilibrium of this game. b) Now suppose that if x₁ + x₂ ≥ 5, players 1 and 2 receive a payoff of 10 - x₁ +10 and 10 - x₂ + 10, respectively. Find a Nash equilibrium of this game.

There are 2 players. Each has an endowment of 10 dollars and chooses how many dollars to contribute to a public pool. Call x₁ and x₂ the contributions of player 1 and player 2, respectively. If x₁ + x₂ ≥ 5, then players 1 and 2 receive a payoff of 10 - x₁ + 1 and 10 − x₂ + 1, respectively. Otherwise they receive a payoff of 10 - x₁ and 10 - x2, respectively. a) Find a Nash equilibrium of this game. b) Now suppose that if x₁ + x₂ ≥ 5, players 1 and 2 receive a payoff of 10 - x₁ +10 and 10 - x₂ + 10, respectively. Find a Nash equilibrium of this game.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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