Community Farming and Cooperation
Imagine a small community of four farmers who share a common irrigation ditch. Each year, the ditch requires maintenance that costs a total of $40. Each farmer can choose to contribute $10 to the maintenance fund. If at least three farmers contribute, the maintenance is completed, and each of the four farmers earns a harvest worth $50. If fewer than three farmers contribute, the maintenance is not done, the ditch fails, and everyone's harvest is worth $0. Compare the likely outcome if all farmers are strictly self-interested versus a scenario where they are influenced by a strong social norm of mutual responsibility. Explain your reasoning for each case.
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Introduction to Microeconomics Course
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