In the Town of Torrelodones, Each of the N >

question 7

Multiple Choice

In the town of Torrelodones, each of the N > 2 inhabitants has $100.They are told that they can all voluntarily contribute to a fund that will be evenly divided among all residents.If $F are contributed to the fund, the local K-Mart will match the private contributions so that the total amount to be divided is $2F.That is, each resident will get back a payment of $2F/N when the fund is divided.If the people in town care only about their own net incomes, in Nash equilibrium, how much will each person contribute to the fund?

• A)$0
• B)$10
• C)$20
• D)$50
• E)$100

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Definitions:

Finance Manager

A professional responsible for managing an organization's financial health by planning, directing, and coordinating investments.

Balanced Scorecard

A planning and management framework that ensures business operations are in line with the organization's vision and strategy, enhances communication internally and externally, and tracks the organization's progress towards strategic objectives.

Liquidity Measures

Financial metrics used to determine an entity's ability to pay off its short-term obligations with available assets without significant loss.

Short-Term Obligations

Financial liabilities or debts that are due to be paid within a short period, typically within a year.