(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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