Week 3/4 - Collective Action Games

Question 1

non-excludable benefits

Answer 1

if you don’t contribute, you can still enjoy benefits

Question 2

non-rival

Answer 2

your benefits are not affected if someone else also gets it

Question 3

social optimum?

Answer 3

when sum of payoffs is maximized

Question 4

when to participate?

Answer 4

P(n+1) > S(n)

Question 5

when to shirk?

Answer 5

P(n+1) < S(n)

Question 6

marginal private gain?

Answer 6

gain you get from switching (payoff after switching less payoff before)

Question 7

marginal social gain?

Answer 7

gain society gets from you switching

Question 8

marginal spillover effect?

Answer 8

MSG - MPG

Question 9

negative externalities exist when?

Answer 9

• action of one person lowers another person’s payoff

- MSE is negative

Question 10

what do we call it when one person’s actions affects another when switching?

Answer 10

• spillover effect
• external effect
• externality

Question 11

total gain for society formula?

Answer 11

(n)P(n) + (N-n)(S(n))

Question 12

marginal social gain formula?

Answer 12

T(n+1) - T(n)

Question 13

marginal private gain formula?

Answer 13

P(n+1) - S(n)

Question 14

marginal spillover effect formula?

Answer 14

MSG - MPG

Question 15

MPG vs MSG in decision making?

Answer 15

decisions are usually made bc of a positive MPG but society would be better off if our decision was based off of the MSG.

Question 16

when is the private gain of switching positive?

Answer 16

P(n+1) > S(n)
(and then solve for n)
(people will switch until there is n-1, then they will stop)

Question 17

when is the social gain of switching positive?

Answer 17

T(n+1) - T(n) > 0
(and then solve for n)
(TSP will be reduced once the number of players exceeds this n that we found)