Timmy and Tommy are considering contributing to a project. If both contribute, each receives a payoff of 20. If neither contribute, each receives a payoff of 10

If only one person contributes, the person who contributes receives a payoff of 14 and the person who does not contribute receives a payoff of 18. Will the public goods problem prevent this project from being completed? Explain why or why not.


The public goods problem will not prevent this project from being completed. The highest payoff for each person is to contribute, regardless of the other person's strategy, so the dominant strategy for both Timmy and Tommy is to contribute.

Economics

You might also like to view...

Refer to Figure 4.8. If 30 of your friends go to the park and 70 go to the beach,

A) your friends at the beach should switch to the park. B) your friends at the park should switch to the beach. C) your friends at the beach should switch to the park and your friends at the park should switch to the beach. D) your friends should stay where they are.

Economics

Inoculation programs against certain diseases such as small pox, polio, and whooping cough create

a. public goods. b. positive externalities in consumption. c. nonrival goods. d. nonexcludable goods. e. external costs to society equal to the costs of the program.

Economics

A perfectly competitive firm's demand curve for labor is not

a. a horizontal line at the market wage rate b. its marginal revenue product curve of labor c. the willingness of the firm to buy various quantities of labor at different wage rates d. unrelated to the supply curve of labor facing the firm e. the marginal physical product curve of labor multiplied by the price of the good

Economics

Suppose a market has the demand function Qd=20-0.5P. At which of the following prices will total revenue be maximized?

a. $10 b. $20 c. $30 d. $40

Economics