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Sagot :
In The absence of any form of agreement the outcome that would be here would be Wisconsin not cleaning the lake, Illinois cleaning the lake.
What is game theory?
This is the theory that is used in economics to determine the best possible payout for two companies.
It tells us of the strategies that both parties would have to put in place when they are stuck at competitive positions.
Cleaning of polluted lake is going to bring about positive externalities and society will be the one to benefit.
For Wisconsin
Cost of cleaning = 1200 ;
benefit = 1500
But the payout is 1100, hence Wisconsin losses 100
For Illinois
cost of cleaning is 700
social benefit to society is 900
They would receive 600 and also lose 100.
The gain Illinois receives from Wisconsin is 400 while the gain Wisconsin receives from Illinois is 300.
So we to conclude that The best thing would be Wisconsin not cleaning the lake, Illinois cleaning the lake.
Read more on game theory here:
https://brainly.com/question/14347653
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