Compute the bayesian nash equilibrium of the game

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Reference no: EM131250141

Two players simultaneously and independently have to decide how much to contribute to a public good. If player 1 contributes x₁ and player 2 contributes x₂, then the value of the public good is which they each receive. Assume that x₁ and x₂ are positive numbers.

Player 1 must pay a cost x 2 1 of contributing; thus, player 1's payoff in the game is ays the cost tx 2 /2 so that player 2's payoff is

The number t is private information to player 2; player 1 knows that t equals 2 with probability 1/2 and it equals 3 with probability 1/2. Compute the Bayesian Nash equilibrium of this game.

Reference no: EM131250141

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