Each of three people chooses whether or not to contribute a fixed amount towards the provision of
Question:
Each of three people chooses whether or not to contribute a fixed amount towards the provision of a public good. The good is provided if and only if at least 2 people contribute; if it is not provided, then the contributions are not refunded. Each person ranks the outcomes from best to worst as follows:
1. Any outcome in which the good is provided and he/she does not contribute.
2. Any outcome in which the good is provided and he/she contributes.
3. Any outcome in which the good is not provided and he/she does not contribute. 4. Any outcome in which the good is not provided and he/she contributes.
Answer the following questions.
(a) (15 marks) Formulate this situation as a three-player matrix game. (b) (15 marks) Find all pure strategy Nash equilibria of this game.