Please no written by hand 5. Two players simultaneously decide whether to contribute (C) or not (N)towards producing a public good. The good is produced if at least one of themcontributes. The benefits derived from the public good is 1 and the cost to player iof contributing is c₁. The payoffs are depicted in the following table.сC1-C₁, 1-C₂N 1,1-₂N1-C₁, 10,0The benefits are common knowledge, but each player's cost is private information.Player i j believes that cj is drawn from a uniform distribution on [0, 2], indepen-dent of c₁. All of this is common knowledge. Formulate this situation as a Bayesiangame and find its set of Bayes-Nash equilibria (hint: consider a cutoff strategy suchthat C if c; k).

Bayes-Nash equilibrium is a concept in game theory that combines the principles of Bayesian games…

5. Two players simultaneously decide whether to contribute (C) or not (N) towards producing a public good. The good is produced if at least one of them contributes. The benefits derived from the public good is 1 and the cost to player i of contributing is c₁. The payoffs are depicted in the following table. C C1-C₁, 1-C₂ N 1,1-₂ N 1-C₁, 1 0,0 The benefits are common knowledge, but each player's cost is private information. Player i j believes that cj is drawn from a uniform distribution on [0, 2], indepen- dent of c. All of this is common knowledge. Formulate this situation as a Bayesian game and find its set of Bayes-Nash equilibria (hint: consider a cutoff strategy such that C if c k).

5. Two players simultaneously decide whether to contribute (C) or not (N) towards producing a public good. The good is produced if at least one of them contributes. The benefits derived from the public good is 1 and the cost to player i of contributing is c₁. The payoffs are depicted in the following table. C C1-C₁, 1-C₂ N 1,1-₂ N 1-C₁, 1 0,0 The benefits are common knowledge, but each player's cost is private information. Player i j believes that cj is drawn from a uniform distribution on [0, 2], indepen- dent of c. All of this is common knowledge. Formulate this situation as a Bayesian game and find its set of Bayes-Nash equilibria (hint: consider a cutoff strategy such that C if c k).

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter19: Externalities And Public Goods

Section: Chapter Questions

Problem 19.7P

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