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In: Economics

Answer the following questions with an essay of not more than 300 words each: 1. The...

Answer the following questions with an essay of not more than 300 words each:
1.
The table below presents the famous stag hunt game:
Player 2
Stag
Hare
Player 1
Stag
10, 10
0, 1
Hare
1, 0
1, 1
a.
Which is (are) the Nash equilibrium(s)? Justify your answer.
b.
Write a short paragraph on a real life example of the pattern of strategic interactions described by the stag hunt game.
2.
a.
Give a real life example of a negative externality. Explain the Pigouvian solution to a negative externality.
b.
Explain the Coase theorem.

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