Lobbyist 1 considers whether to spend money for lobbying for a new bill in favor of his interest group or not. If he invests, lobbyist 2 from the opposite interest group will also join in investing into lobbying. If lobbyist 1 chooses not to lobby, the game ends, and both groups receive a payoff of 2. If he decides to lobby, both lobbyists simultaneously decide between spending a high or a low amount of money. If both choose a high amount or both choose a low amount, the bill will not be passed and both groups end up with a payoff of zero. If lobbyist 1 chooses a high amount and lobbyist 2 a low amount, the bill will be passed in favour of lobbyist 1, leaving him with a payoff of 3, while lobbyist has a payoff of 1 (a bill is better than no bill).If lobbyist 1 chooses a low amount and lobbyist 2 a high amount, then lobbyist 1 has
Lobbyist 1 considers whether to spend money for lobbying for a new bill in favor of his interest group or not. If he invests, lobbyist 2 from the opposite interest group will also join in investing into lobbying. If lobbyist 1 chooses not to lobby, the game ends, and both groups receive a payoff of 2. If he decides to lobby, both lobbyists simultaneously decide between spending a high or a low amount of money. If both choose a high amount or both choose a low amount, the bill will not be passed and both groups end up with a payoff of zero. If lobbyist 1 chooses a high amount and lobbyist 2 a low amount, the bill will be passed in favour of lobbyist 1, leaving him with a payoff of 3, while lobbyist has a payoff of 1 (a bill is better than no bill).If lobbyist 1 chooses a low amount and lobbyist 2 a high amount, then lobbyist 1 has
Chapter2: Mathematics For Microeconomics
Section: Chapter Questions
Problem 2.15P
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