Question

Ten economists are supposed to write a report about climate change for a government agency. Each economist individually takes a decision whether to contribute to the report, or to shirk and spend time on Facebook instead. The time and effort spent when helping out corresponds to a monetary cost of 100,000 SEK each (which is zero when shirking). The economists get paid depending on the quality of the report, which in turn depends on how many helped out in writing it. For part (A) to (D) of this question, we assume that all workers strive to maximize their monetary earnings. 

(A) Suppose first that each economist get paid 30,000 SEK times the number of economists that contribute to the report. Draw a diagram showing the payoff for one of the economists of contributing to the report when n other economists are contributing. Use the same diagram to also show the payoff from shirking when n other economists are contributing. 

(B) What is the pure-strategy Nash equilibrium if all economists decide simultaneously whether to contribute or not and they are paid as in part (A) of the question? 

(C) Suppose now that they get paid 300,000 SEK if all economists contribute to the report and zero otherwise. Draw a similar diagram as in part (A) that shows the payoff to one economist from contributing/shirking when n other economists are contributing. 

(D) What is the pure-strategy Nash equilibrium if all economists decide simultaneously whether to contribute or not and they are paid as in part (C) of the question?

(E) Suppose that you just got your first job and that you had to write a report together with your new colleagues. Assume that you and your colleagues were paid as in part (A). How many economists do you think would contribute to the report?