4. The game to the right is an example of Chicken where T>R>P>S. Consider the following tit-for-tat strategy a. TFT = Betsy Susan→ Acquiesce (A) Insist (1) [start with A; play whatever your opponent did in the previous period A R, R T, P I P, T S, S Consider a repeated version of this game, where the ending period is finite, but unknown. Under what condition is (TFT, TFT) a Nash equilibrium? b. Is (TFT, TFT) a subgame perfect Nash equilibrium (SPNE)? Note: no illustrations are necessary to justify your answer but you do need to consider potentialities where TFT is paired with some strategy other than TFT.

4. The game to the right is an example of Chicken where T>R>P>S. Consider the following tit-for-tat strategy a. TFT = Betsy Susan→ Acquiesce (A) Insist (1) [start with A; play whatever your opponent did in the previous period A R, R T, P I P, T S, S Consider a repeated version of this game, where the ending period is finite, but unknown. Under what condition is (TFT, TFT) a Nash equilibrium? b. Is (TFT, TFT) a subgame perfect Nash equilibrium (SPNE)? Note: no illustrations are necessary to justify your answer but you do need to consider potentialities where TFT is paired with some strategy other than TFT.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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