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Please answer Q1. Your goal is to analyze the data from an experiment that we run in class to get an insight into some of
Please answer Q1.
Your goal is to analyze the data from an experiment that we run in class to get an insight into some of the processes underlying human decision making. The Public Good Experiment The Public Good Game was played as follows. In each round, you were divided into groups of 4. Each player received an endowment of 10 tokens and had to decide how to allocate these tokens between a Private Account and a Common Account. Each token in a player's Private Account was worth 15 to them and OS to the other group members. Each token contributed to the Common Account was worth 0.755 to all members of the group. At the end of each round, you were informed about the total contribution to the Common Account and your resulting payoff. The treatments The experiment consisted of two treatments. The two treatments were played consecutively (withindesign) and lasted for seven periods each. The treatments were identical except for the way groups were formed. In the first treatment, the same four players interacted in each round (partner matching). In the second treatment, groups were randomly formed anew in each round (stranger matching). Please answer the following questions Question 1: What is the Nash equilibrium for this game assuming that individuals care only for maximizing their own earnings and that this is common knowledge amongst players? Does the Nash equilibrium differ across treatments? Make sure to explain your answer. (3 points)Step by Step Solution
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