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Poornima and Valerie are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or
Poornima and Valerie are considering contributing toward the creation of a public park. Each can choose whether to contribute $400 to the public park or to keep that $400 for a new suit. Since a public park is a public good, both Poornima and Valerie will benefit from any contributions made by the other person. Specifically, every dollar that either one of them contributes will bring each of them $0.90 of benefit. For example, if both Poornima and Valerie choose to contribute, then a total of $800 would be contributed to the public park. So, Poornima and Valerie would each receive $720 of benefit from the public park, and their combined benefit would be $1,440. This is shown in the upper left cell of the first table. Since a new suit is a private good, if Poornima chooses to spend $400 on a new suit, Poornima would get $400 of benefit from the new suit and Valerie wouldn't receive any benefit from Poornima's choice. If Poornima still spends $400 on a new suit and Valerie chooses to contribute $400 to the public park, Poornima would still receive the $360 of benefit from Valerie's generosity. In other words, if Poornima decides
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