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In a study conducted at the economic laboratory, Person A is randomly paired with (N - 1) other participants.
The pairing is anonymous, meaning that neither individual will ever know the identity of the other individual
with whom he or she is paired.
In the experiment, all the group members will make a choice, the experimenter will record this choice,
and then all individuals will be informed of the choice and paid money based on the choices made all
individuals, as well as a small participation fee. Suppose that neither individual will receive any
other money for participating in the experiment.
Each member of the group have to choose simultaneously between action X or action Y.
If at least one member of the group selects action X, all member of the group obtain a payoff of 10€.
If no member of the group selects X, all group members obtain 0€. All the individuals that select X have
to pay a cost of 3€. Hence, individuals that select X obtain 7€.
Since the decisions are taken simultaneously, Person A does not know the decisions of the other members of
the group. Other members of the group do not know the decision of Player A, nor the decisions of other players.
For example, if Person A chooses X, Person A, and all the individuals that selected X, obtain 7€.
All the individuals that selected Y obtain 10€. If Person A chooses Y, Person A, and all individuals that
selected Y, obtains 10€ if at least one individual selected X, and 0€ otherwise.
Please make sure you understand the situation.
Please evaluate the possible actions of Person A.