A small community has 10 people, each of whom has a wealth of $19,000.Each individual must choose whether to contribute $200 or $0 to the support of public entertainment for their community.The money value of the benefit that a person gets from this public entertainment is .80 times the total amount of money contributed by individuals in the community.
A)This game has a dominant strategy equilibrium in which all 10 citizens contribute $200 to support public entertainment.
B)This game has two Nash equilibria, one in which everybody contributes $200 and one in which nobody contributes $200.
C)This game has a Nash equilibrium in which 5 people contribute $200 and for public entertainment and 5 people contribute nothing.
D)This game has no Nash equilibrium in pure strategies, but has a Nash equilibrium in mixed strategies.
E)This game has a dominant strategy equilibrium in which nobody contributes anything for public entertainment.

Question

Quizplus · Accepted Answer

If nobody contributes, each person retains their $200, and since the benefit is 0.8 times the total contribution, contributing nothing is the dominant strategy as it maximizes individual wealth without any loss.

A Small Community Has 10 People, Each of Whom Has