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Unformatted text preview: use this money either to buy a government bond that pays 15 percent interest per year or to buy a year-old llama, send it onto the commons to graze, and sell it after one year. The price the villager gets for the 2-year-old llama depends on the quality of the fleece it grows while grazing on the commons. That in turn depends on the animals access to grazing, which depends on the number of llamas sent to the commons, as shown in the following table: Number of llamas on the commons Price per 2-year-old llama ($) 1 122 2 118 3 116 4 114 5 112 6 109 The villagers make their investment decisions one after another, and their decisions are public....
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This note was uploaded on 02/20/2012 for the course ECON 202 taught by Professor Brightwell during the Spring '08 term at Texas A&M.
- Spring '08