Figure 10.1: Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.
-Refer to Figure 10.1. The Nash equilibrium occurs on the ________ page, in the ________ cell.

Question

Figure 10.1:  Three neighbors in a cul-de-sac, Bo, Luke, and Daisy, have an option of contributing or not contributing to paying for and installing outdoor security lighting to help make their cul-de-sac safer. For each person who contributes, one security light will be installed. The payoff matrix for this scenario is shown above.
-Refer to Figure 10.1. The Nash equilibrium occurs on the ________ page, in the ________ cell.

Quizplus · Accepted Answer

In a Nash equilibrium, each player's strategy is optimal given the other player's strategy. In the context of a public goods game, which the options suggest, the Nash equilibrium typically occurs where players choose not to contribute, assuming rational self-interested agents. This is because each individual benefits from the contributions of others without contributing themselves, leading to a situation where the dominant strategy for each is not to contribute if they believe others will contribute. The "lower-right" cell usually represents the outcome where both players choose not to contribute, hence the Nash equilibrium in this context.

Figure 101: Three Neighbors in a Cul-De-Sac, Bo, Luke, and and Daisy