Bruce owns a cooperative project with two other members. Any member that chooses to put in a full day of work faces a cost of £50 but produces a total income of £120, which is shared amongst the three. So, for example, if Bruce and one other member do a full day of work, then the income per member is (£120 x 2)/3 = £80, leaving Bruce with a net income of £80 - £50 = £30. Assume that a member must either put in a full day of work or none at all. Not working costs £0. Based on this information, read the following statements and select the incorrect one.
Bruce is better off not working, irrespective of the actions of the other members.
❌
The dominant strategy equilibrium of this public goods game is when no one works.
❌
Bruce’s net income when all three members work is £80.
✅
The socially optimal outcome (one with the highest total net income) is when all work.
❌

Question

Bruce owns a cooperative project with two other members. Any member that chooses to put in a full day of work faces a cost of £50 but produces a total income of £120, which is shared amongst the three. So, for example, if Bruce and one other member do a full day of work, then the income per member is (£120 x 2)/3 = £80, leaving Bruce with a net income of £80 - £50 = £30. Assume that a member must either put in a full day of work or none at all. Not working costs £0. Based on this information, read the following statements and select the incorrect one.

Bruce is better off not working, irrespective of the actions of the other members.

❌

The dominant strategy equilibrium of this public goods game is when no one works.

❌

Bruce’s net income when all three members work is £80.

✅

The socially optimal outcome (one with the highest total net income) is when all work.

❌

Accepted Answer

Bruce’s net income when all three members work is £80.

Answer

Bruce is better off not working, irrespective of the actions of the other members.

Answer

The dominant strategy equilibrium of this public goods game is when no one works.

Answer

The socially optimal outcome (one with the highest total net income) is when all work.

Crowdly

Bruce owns a cooperative project with two other members. Any member that chooses...

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