6. Free-riding Scenario: You and 9 other people have an endowment of 20 Euros. Everybody can contribute up to the full endowment of 20 Euros to a common fund. The contributions to this fund will be doubled and then redistributed equally among you and the other 9 people. (Hint: use an Excel spreadsheet to arrive at answers!) a. Assume everybody, including yourself, is behaving socially, that is, contributing so as to maximize the total payoff. How much will each person contribute? What will be the total payoff? How much will each person take away individually, including yourself? b. Assume everybody else is behaving socially, but you are behaving selfishly, looking out only for yourself. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? c. Assume everybody else is behaving selfishly, but you are behaving socially. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? d. Assume everybody, including yourself, is behaving selfishly. How much will each person contribute? What will be the total payoff? How much will each person take away individually?

6. Free-riding Scenario: You and 9 other people have an endowment of 20 Euros. Everybody can contribute up to the full endowment of 20 Euros to a common fund. The contributions to this fund will be doubled and then redistributed equally among you and the other 9 people. (Hint: use an Excel spreadsheet to arrive at answers!) a. Assume everybody, including yourself, is behaving socially, that is, contributing so as to maximize the total payoff. How much will each person contribute? What will be the total payoff? How much will each person take away individually, including yourself? b. Assume everybody else is behaving socially, but you are behaving selfishly, looking out only for yourself. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? c. Assume everybody else is behaving selfishly, but you are behaving socially. How much will you contribute? How much will you take away? What will be the total payoff? How much will the others get? d. Assume everybody, including yourself, is behaving selfishly. How much will each person contribute? What will be the total payoff? How much will each person take away individually?

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter8: Savings,investment And The Financial System

Section: Chapter Questions

Problem 7PA

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