The New York City Council is ready to vote on two bills that authorize the construction of new roads in Manhattan and Brooklyn. If the two boroughs join forces, they can pass both bills, but neither borough by itself has enough power to pass a bill. If a bill is passed, then it will cost the taxpayers of each borough $1 million, but if roads are built in a borough, the benefits to the borough are estimated to be $10 million. The council votes on both bills simultaneously, and each councilperson must vote on the bills without knowing how anybody else will vote. Assuming that each borough supports its own bill, determine whether this game has any equilibrium points. Is this game analogous to the Prisoner’s Dilemma? Explain why or why not.
The New York City Council is ready to vote on two bills that authorize the construction of new roads in Manhattan and Brooklyn. If the two boroughs join forces, they can pass both bills, but neither borough by itself has enough power to pass a bill. If a bill is passed, then it will cost the taxpayers of each borough $1 million, but if roads are built in a borough, the benefits to the borough are estimated to be $10 million. The council votes on both bills simultaneously, and each councilperson must vote on the bills without knowing how anybody else will vote. Assuming that each borough supports its own bill, determine whether this game has any equilibrium points. Is this game analogous to the Prisoner’s Dilemma? Explain why or why not.
Microeconomics: Principles & Policy
14th Edition
ISBN:9781337794992
Author:William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:William J. Baumol, Alan S. Blinder, John L. Solow
Chapter16: Externalities, The Environment, And Natural Resources
Section: Chapter Questions
Problem 2DQ
Related questions
Question
- The New York City Council is ready to vote on two bills
that authorize the construction of new roads in Manhattan
and Brooklyn. If the two boroughs join forces, they can pass
both bills, but neither borough by itself has enough power
to pass a bill. If a bill is passed, then it will cost the taxpayers
of each borough $1 million, but if roads are built in a
borough, the benefits to the borough are estimated to be $10
million. The council votes on both bills simultaneously, and
each councilperson must vote on the bills without knowing
how anybody else will vote. Assuming that each borough
supports its own bill, determine whether this game has any
equilibrium points. Is this game analogous to the Prisoner’s
Dilemma? Explain why or why not.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax
Microeconomics: Principles & Policy
Economics
ISBN:
9781337794992
Author:
William J. Baumol, Alan S. Blinder, John L. Solow
Publisher:
Cengage Learning
Principles of Economics 2e
Economics
ISBN:
9781947172364
Author:
Steven A. Greenlaw; David Shapiro
Publisher:
OpenStax