ECO 4193 Lecture Notes - Lecture 3: Nash Equilibrium, Best Response, Equilibrium Point
12 Mar 2018
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0. 1 the two-herder model: an analysis in strategic behavior. Indeed, it provides a great platform on which to review the nash equilibrium concept. Suppose that two goat herders have access to a pasture. We assume that the only input to the pasture takes the form of the number of goats sent grazing. Let x denote the total number of goats and y the total output produced in units of goat meat, say kilograms. The pasture"s production technology f (x) is increasing and concave, i. e. , f (x) > 0 and f (x) < Note that in order to concentrate on the issue of free access, we consider a simple setting in which the herders interact only once. In particular, we abstract from the dynamic stock- ow e ects inherent in pasture land use issues, such as grass growth or soil erosion, as well as the usual repeated and multiple interactions that herders may have.
