Consider the following game: There are 3 players. Each player decides whether to

Question

Consider the following game: There are 3 players. Each player decides whether to work on a common project or not. The project is successful only if 2 or more players work on it. When the project is successful, each player who works on the project obtains a payoff of 20. When the project is not successful, each player who works on the project obtains a payoff of -10. If a player does not work on the project her payoff is 0. Denoting by N the number of players who work on the project, determine what value or values of N are consistent with the Nash Equilibria of the game.

Explanation / Answer

Ans) Nash Equilibrium will be that all 3 players will shirk so as to free ride the other, and also not to reduce their pay-off to -10.

All 3 players will shirk as there is an incentive to shirk and free-ride. If they don't work hard, then pay-off is either 0 or 20, but otherwise the pay-off can reduce to -10 also.

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