Consider a society of n people. Everybody has access to a common meadow. Each individual can...

Consider a society of n people. Everybody has access to a common meadow. Each individual can choose either a high level of grazing on the meadow H or a low level of grazing L. If an individual chooses H, they receive a private benefit of b and impose a cost of c on each individual in society including themselves (i.e. a cost of c on individual 1, a cost of c on individual 2, etc.). If an individual chooses L, they receive a private benefit of a and impose no cost on anyone.

a. If b > a+c, what is the Nash equilibrium of this game? How about when b < a+c? Explain your reasoning.

b. Derive a condition under which a ban on high grazing would make everyone better off relative to the original Nash equilibrium of the game.

c. How does the condition in part (b) vary with the population size n? Explain the intuition behind this.

Expert Solution

Rahul Sunny answered 1 year ago

.Can an individual change society?

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