1. Suppose the following game is repeated infinitely. The players have a common discount factor dE (0,1). C D 0,5 1 С 32 1,1 D 5,0 For high enough values of 6, there is an equilibrium of the infinitely repeated game in which (C, C) is played in the first 4 periods followed by (D. D) in sub- sequent periods. Is this true or false? Explain carefully.
1. Suppose the following game is repeated infinitely. The players have a common discount factor dE (0,1). C D 0,5 1 С 32 1,1 D 5,0 For high enough values of 6, there is an equilibrium of the infinitely repeated game in which (C, C) is played in the first 4 periods followed by (D. D) in sub- sequent periods. Is this true or false? Explain carefully.
Chapter8: Game Theory
Section: Chapter Questions
Problem 8.9P
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Transcribed Image Text:1. Suppose the following game is repeated infinitely. The players have a common
discount factor & E (0,1).
C
1 C 3,2 0,5
D 5,0 1,1
For high enough values of 6, there is an equilibrium of the infinitely repeated
game in which (C,C) is played in the first 4 periods followed by (D, D) in sub-
sequent periods. Is this true or false? Explain carefully.
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