A

Protect

Both A and B have a cost of 10 and a

benefit of 16; each country has net = 6

A has a cost of 10 and a benefit of 8 (net =

–2); B has a cost of 0 and a benefit of 8 (

net = 8)

Not

Protect

A has a cost of 0 and a benefit of 8 (net =

8); B has a cost of 10 and a benefit of 8

(net = –2)

Both A and B have a zero cost and a zero

benefit; each country has net = 0

Country B will reason this way: If A protects the environment, then we will have benefits of 6 if we act to

protect the environment, but 8 if we do not, so we will not protect it. If A is not protecting the environment,

we will have losses of 2 if we protect, but have zero if we do not protect, so again, we will not protect it.

Country A will reason in a similar manner. The result is that both countries choose to not protect, even

though they will achieve the largest social benefits—a combined benefit of 12 for the two countries—if they
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