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4. Consider the payoff matrix shown below, which represents the contributions and accompanying payoffs associated with the production of some good. Person B Do not
4. Consider the payoff matrix shown below, which represents the contributions and accompanying payoffs associated with the production of some good. Person B Do not contribute Contribute A pays $0, receives $0, A pays $0, receives $21, net gain $0 net gain $21 Do not contribute B pays $0, receives $0, B pays $28, receives $21, net gain $0 net gain $-7 Person A A pays $28, receives $21, | A pays $28, receives $42, Contribute net gain $-7 net gain $14 B pays $0, receives $21, B pays $28, receives $42, net gain $21 net gain $14 a. Based on the information shown in the payoff matrix, explain why you think this good should be classified as a public good. (HINT: Recall the two criteria associated with public goods, and explain why each of those appears to be satisfied.) b. Find the Nash equilibrium. How many Nash equilibria does this game have? c. Find Person A's dominant strategy, or explain why there isn't one. d. If these two people are not cooperating, will the good be provided? Why or why not? e. Explain why cooperation matters here. Would the situation change if they were able to cooperate somehow? Why or why not
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