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Answer ALL questions from this section. 1. A public good is provided to a group of 2 individuals if both are willing to pay the

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Answer ALL questions from this section. 1. A public good is provided to a group of 2 individuals if both are willing to pay the cost of the good. Each player simultaneously submits an offer that can be either 2 or 0. If the good is provided the individual i's payoff is v, - 2. If the good is not provided the individual i's payoff is 0 minus the individual i's offer. (payoffs are summarized in the table) Each individual i knows his own evaluation . She does not know the evaluation of the other person. They know that the evaluations can be either 6 or 1 with equal probability. Find all Bayesian Nash equilibria. (20 marks) Individual 2 Offer = 2 Offer = 0 Individual 1 Offer = 2 171 - 2, 12 - 2 2, 0 Offer = 0 0, -2 0, 0 2. Consider the following game. Nature determines if payoffs are as in G1 or in G2 by equal probability GI Player 2 A B Player 1 A 2, 2 0, 4 B 1, 0 1, 1 G2 Player 2 A B Player 1 A 2, 5 0, 4 B 1, 2 1, 1 Players 2 knows which game Nature has chosen, but Player 1 does not. Player 2 moves first. Player 1 observes the choice of Player 2 before to move. Find all Perfect Bayesian equilibria. (20 marks)

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