Question: Question 1 (25 points): Two players have to simultaneously decide how much to contribute to the provision of a public good. If player 1 contributes

 Question 1 (25 points): Two players have to simultaneously decide how

Question 1 (25 points): Two players have to simultaneously decide how much to contribute to the provision of a public good. If player 1 contributes x and player 2 contributes y, then the value of the public good is 2x + 2y + ny which both players receive. The players can choose any non-negative number as their contribution. Player 1 (P1) must pay a cost x2 of contributing, and hence P1 chooses x to maximize her payoff in the game which is given by u1(x,y) = 2x+2y+2xy x2 Player 2 (P2) pays the cost 2y2 if she contributes y. Hence P2 chooses y to maximize her payoff in the game which is given by u2(x,y) = 2x + 2y + by 23/2

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