2. In the town of Torrelodones, each of the N > 2 inhabitants bas $100. They are

Question

2. In the town of Torrelodones, each of the N > 2 inhabitants bas $100. They are told that they can all voluntarily contribute to a fund that will be evenly divided among all residents. If SF are contributed to the fund, the local K-Mart will match the private contributions so that the total amount to be divided is $2F. That is, each resident will get back a payment of $2FIN when the fund is divided. If the people in town care only about their own net incomes, in Nash equilibrium, how much will each person contribute to the fund? b. $10 c.. $20- d. $50. e $100

Explanation / Answer

Ans. The answer will be $ 0 when people in the town care only about their own net incomes in Nash equilibrium.

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