In the town of Torrelodones, each of
the N > 2 inhabitants has $100. They are told that they
can all voluntarily contribute to a fund that will be evenly
divided among all residents. If $F are contributed to the
fund, the local K-Mart will match the private contributions so that
the total amount to be divided is $2F. That is, each
resident will get back a payment of $2F/N when the
fund is divided. If the people in town care only about their own
net incomes, in Nash equilibrium, how much will each person
contribute to the fund?
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