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.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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