Please explain why the right answer is B. An Island is inhabited by two people.

Question

Please explain why the right answer is B.

An Island is inhabited by two people. Robin and Son. The utility Robin derives from a public good G is 2S and the utility Son derives from the same public good is 4S. The government does not know the utilities of Robin and Son. The government asks Robin and Son separately whether they want to contribute an amount of x$ or an amount of 0$ to the public good. If both contribute, the government provides the public good and Robin and Son pay their contributions. Otherwise, the public good is not provided, but each player has to pay his contribution. Which is of the following statements is FALSE? For all values of x >= 0, there exists a Nash equilibrium in which nobody contributes to the public good. If x is smaller than 2, there exists no Nash equilibrium in which at least one player contributes to the public good. If x is smaller than 2, there exists more than one Nash equilibrium. The provision of the public good is socially desirable if the price of provision is less than 6$.

Explanation / Answer

b. if x is smaller than 2 then there will be nash equilibrium in which at lesast one player contribute to goods

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as x <2 then they are contributing less and getting more ..

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