2.Consider the Tragedy of the Commons game with two shepherds, A and B. Let s A

Question

2.Consider the Tragedy of the Commons game with two shepherds, A and B. LetsA and sB denote the number of sheep each shepherd grazes on the common

pasture. Assume the benefit per sheep equals 300sA sB
Assume the marginal cost of grazing sheep is zero since the common can be freely

used.
a. Compute the flock sizes and shepherds’ total benefits in the Nash equilibrium.

b. Suppose A’s benefit per sheep rises to!330sA sB while B’s benefit remains the same. Compute the new Nash equilibrium flock sizes.

a. s(a)=s(b)=100
b. s(a)=120, s(b)=90

Explanation / Answer

2.Consider the Tragedy of the Commons game with two shepherds, A and B. Let s A

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