3. Consider the following version of the prisoner's dilemma: 1 2 C d C 2,1 -1,4 d 3,-3 0,0 Assume that this game is repeated an infinite number of times, and that both players discount future payoffs with the same discount factor 6. a. Suppose that both players follow the following trigger-strategy: "play c as long as no one has ever played d; otherwise, play d". Find the minimum value of such that this is a SPE.

3. Consider the following version of the prisoner's dilemma: 1 2 C d C 2,1 -1,4 d 3,-3 0,0 Assume that this game is repeated an infinite number of times, and that both players discount future payoffs with the same discount factor 6. a. Suppose that both players follow the following trigger-strategy: "play c as long as no one has ever played d; otherwise, play d". Find the minimum value of such that this is a SPE.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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