Suppose a project is undertaken. There are n people that are on the project. Bei

Question

Suppose a project is undertaken. There are n people that are on the project. Being on the project does not necessarily mean though that all contribute effort to the project. Each participant has to decide whether to contribute effort to shirk. The project is successful if and only if at least k people put in effort, where k {2,. . . , n}. Each participant's preferences are described as follows: The best outcome for each participant is when the project is successful but she does not need to put in effort. The second best outcome is one in which the project is successful and she puts in effort. The third best outcome is when she does not put in effort and the project is not successful. Finally, the worst outcome is that she contributes effort to the project but at the end the project is unsuccessful. Formulate this situation as a strategic game and find its Nash equilibrium. (Is there a Nash equilibrium in which more than k people put in effort? One in which k people put in effort? One in which fewer than k people put in effort?)

Explanation / Answer

A)

'n' number of players, where each can choose to put in effort or not put any effort.

Each participant's preferences:

B)

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