Question: make a simple public goods game with 3 players and equal endowment and an endowment of M. Write up this public goods game formally. (4

make a simple public goods game with 3 players and equal endowment and an endowment of M.

  1. Write up this public goods game formally.

 (4 Marks)
  1. Explain the standard public goods problem by using a multiplier of 2. Show the equilibrium for the game.

 (6 Marks)
  1. Explain what the social optimal point is and why it is not reached (show why it is not a Nash Equilibrium).

 (4 Marks)
  1. Explain the value for M that avoids the public goods problem and explain the logic behind this.

 (5 Marks)
  1. Suggest ways of avoiding this public goods problem, this can include repetition, using the suggestions about the commons from Ostrom, Cheap talk, and relationship between players.
 (6 Marks)

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