Question 15.72

40. Consider a free-rider problem in which two bus riders can choose to pay their fares or not. As long as at least one player pays his or her fare, then the bus continues to operate—though the rider who pays will have to pay twice as much for a ride. Each player ranks the outcomes from best to worst as follows:

  • 4: Ride the bus for free and have the other player pay double.
  • 3: Pay to ride the bus and have the other player pay his or her fare, too.
  • 2: Pay to ride the bus and have the other player ride free.
  • 1: The bus stops operating.

This game is modeled by the following matrix. Use it to analyze the optimal behavior. Does this game share payoffs with any other game considered in this chapter?

Rider 2
Pay Fare Ride Free
Rider 1 Pay Fare (3, 3) (2, 4)
Ride Free (4, 2) (1, 1)