A doubt about Game Theory(Gibbons, Game Theory for Applied Economists)

2010-07-01T07:41:18Z

When I read the book write by Robert Gibbons . In the first chapter, they discussed "The Problem of the Commons" I can't understand why

$v^{'} \left(g_i + g_{-i}^{*}\right)$ (page 27)

represent the damage of the price of the original price of the sheep.

I think the damage of the price of the original price should be:

$v \left(G\right) - v\left(g_i + g_{-i}^{*}\right)$

where $G$ means the original number of sheep . the price function $V$ has the relationship with the number of the sheep.

Also in the page 27, the author say the first order condition for this optimization problem

is $v \left(g_i + g_{-i}^{*}\right) + g_iv^{'} \left(g_i + g_{-i}^{*}\right) -c =0$

I can't understand the author want to say......Perhaps he means we should find $g_i$ as bigger as possible until we can't earn more money when we add more sheep.

A doubt about Game Theory(Gibbons, Game Theory for Applied Economists) - MathOverflow [closed]

A doubt about Game Theory(Gibbons, Game Theory for Applied Economists)