3. Most of us would like to live in a world were crimes are reported and dealt with, but we’d prefer to have others bear the burden of reporting a crime. Suppose a crime is witnessed by 76 N people, and suppose the cost of picking up the phone and reporting the crime is c > 0. Begin by assuming that everyone places a value x > c on the crime being reported, and if the crime goes unreported, everyone’s payoff is 0. Thus, the payoff to me if you report a crime is x, and the payoff to me if I report a crime is (x - c). (a) Each person then has to simultaneously decide whether or not to pick up the phone to report the crime. Is there a Nash equilibrium in which no one reports the crime? (b) Is there a Nash equilibrium in which more than one person reports the crime? (c) There are many Nash equilibria in this game. What do all of them have in common?
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3. Most of us would like to live in a world were crimes are reported and...