<p>Assume that there are two parents A and B who are tempted to pick up their children late. We denote the set of parents <span class="math-container">$N = {A, B}$</span>. Each parent <span class="math-container">$i \in N$</span> chooses from the action set <span class="math-container">$A^i = {E, L}$</span> between being early or being late. The game is perfect information. If we denote the opportunity cost of being early <span class="math-container">$c_e^i$</span>, we have <span class="math-container">$c_e^A=31$</span> and <span class="math-container">$c_e^B=33$</span>. Suppose that for each child that is recollected late there is an implicit cost of <span class="math-container">$c_{L,e}^B=20$</span> on each parent. We can denote the total externality that each parent faces as <span class="math-container">$C_{L,e}(n) = nc_{L,e}$</span></p>
<p>Would the payoff matrix be something like this:
<span class="math-container">$$\left[\begin{matrix}(-11,-13)&amp;(11,-13)\\(13,-11)&amp;(13,11)\end{matrix} \right]$$</span>
B in row and A in column.</p>

CC BY-SA 4.0
2021-05-14T21:00:11.233Z
Is the $B$ in $c^B_{L,e}$ a typo? What does the $e$ in $c_{L,e}$ and $C_{L,e}$ stand for? What is $n$? Why do parents "face an externality" and what does this mean?
VARulle
CC BY-SA 4.0
2021-05-15T00:17:22.997Z
@VARulle is not a typo, as far as I'm understanding it stands for the parent B. $e$ is an externality, whereas $n$ is the number of parents being late. The externality faced is: The late recollections have some adverse consequences: The kindergarten workers feel that parents are irresponsible and it discourages them from exerting extra effort when taking care of the children.
Maybeline Lee
CC BY-SA 4.0
2021-05-15T09:13:01.937Z
If $c^B_{L,e}$ is not a typo, then is there also a $c^A_{L,e}$? Or why do you refer to parent $B$ in the "implicit cost on each parent"?
VARulle
<microeconomics><game-theory>
Perfect information game
Maybeline Lee
# Perfect information game

(Asked by: username_0 on 2021-05-14)

Assume that there are two parents A and B who are tempted to pick up their children late. We denote the set of parents $N = {A, B}$. Each parent $i \in N$ chooses from the action set $A^i = {E, L}$ between being early or being late. The game is perfect information. If we denote the opportunity cost of being early $c\_e^i$, we have $c\_e^A=31$ and $c\_e^B=33$. Suppose that for each child that is recollected late there is an implicit cost of $c\_{L,e}^B=20$ on each parent. We can denote the total externality that each parent faces as $C\_{L,e}(n) = nc\_{L,e}$

Would the payoff matrix be something like this:
$$\left[\begin{matrix}(-11,-13)&(11,-13)\\(13,-11)&(13,11)\end{matrix} \right]$$
B in row and A in column.

**Tags:** microeconomics, game-theory

> **Comments:**
> **username_1**: Is the $B$ in $c^B_{L,e}$ a typo? What does the $e$ in $c_{L,e}$ and $C_{L,e}$ stand for? What is $n$? Why do parents "face an externality" and what does this mean?  
> **username_0**: @username_1 is not a typo, as far as I'm understanding it stands for the parent B. $e$ is an externality, whereas $n$ is the number of parents being late. The externality faced is: The late recollections have some adverse consequences: The kindergarten workers feel that parents are irresponsible and it discourages them from exerting extra effort when taking care of the children.  
> **username_1**: If $c^B_{L,e}$ is not a typo, then is there also a $c^A_{L,e}$? Or why do you refer to parent $B$ in the "implicit cost on each parent"?  

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## 0 answers

