Question
For part 3 in the question below, how do we determine if it has positive externality? Explanations would be helpful! (Graphs too maybe) :) Thank
For part 3 in the question below, how do we determine if it has positive externality? Explanations would be helpful! (Graphs too maybe) :) Thank you!
Bob and Sue are trying to determine whether or not to get vaccinated against ClamShell Sickness. If neither of them get vaccinated, the probability of getting sick is 0.05%. If both of them get vaccinated, the probability of getting sick is 0.01%. If only one gets vaccinated, then the person not vaccinated has a 0.03% chance of getting sick, while the person who is vaccinated has a 0.02% chance of being sick.
- Provide the payoff matrix for this scenario. If this were a simultaneous one shot game - explain the equilibrium/equilibria.
- Would the outcome change if the scenario were played out sequentially - i.e. Bob gets to choose first and then Sue? Explain.
- Does this scenario depict a positive externality? Explain.
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