Both wisconsin and illinois border lake michigan. the lake is becoming polluted and both states are deciding whether or not to clean it. if wisconsin decides to clean the lake it will cost 1200 and generate social benefits of 1500 – however, wisconsin will receive only 1100 of those social benefits while neighbor illinois will receive the other 400. if illinois cleans the lake, it will cost them 700 and generate social benefits of 900 – however, illinois will receive only 600 of those benefits, wisconsin will receive the remaining 300. if a state does not clean the lake, it experiences a cost of $0. in the absence of any agreement, the outcome of this game will be

Financial markets and channel to . they also channel money from individuals who want to for the future to those who need cash to spend today. a third function of financial markets is to allow individuals and businesses to adjust their risk. for example, , such as the vanguard index fund, and , such as spdr's or “spiders,” allow individuals to spread their risk across a large number of stocks. financial markets provide other mechanisms for sharing risks. for example, a wheat farmer and a baker may use the to reduce their exposure to wheat prices. financial markets and intermediaries allow investors to turn an investment into cash when needed. for example, the of public companies are because they are traded in huge volumes on the . are the main providers of payment services by offering checking accounts and electronic transfers. finally, financial markets provide information. for example, the of a company that is contemplating an issue of debt can look at the yields on existing to gauge how much interest the company will need to pay.