Suppose fishermen of two neighboring towns, Town A and Town B, use a shared port. Building a lighthouse near the port would cost $20,000, but it would benefit both towns by improving fisherman safety, and therefore each town is considering the decision to sign off on lighthouse construction. A town's pay off from a new lighthouse is given as ui=wi+rici, where wi is a town's monetary endowment, ti is a town's reservation price for the lighthouse, and ci is the provision cost incurred by the town. If the lighthouse is not provided, neither town gains utility from it (ui= 0). However, if at least one town agrees to begin construction, the lighthouse will be built. Town A has a monetary endowment wA=$40,000 and a reservation price TA=$15,000.Town B has a monetary endowment wB=$30,000 and a reservation price rB=$17,000 .(a)Suppose the towns attempt to coordinate and equally share the $20,000 dollar cost of the lighthouse construction if they both choose to invest. However, there is no legal system in place that will hold them accountable to each other if they chose to not to follow through on their promises. Build a 2x2 game table based on the decision that each town makes, including all three components of a normal form game.(b)Identify the Nash Equilibrium/Equilibria in this game. What is each town's dominant strategy in this game? (c)What problem does this situation highlight?

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