Consider the following game in normal form. Player 2 L N Player A 8,11 0,0 1 B9,-1 0.5,5 Assume that the game will be repeated infinitely many times, and that player 2 is playing a grim trigger strategy. That is, he starts in the first period with L and plays L as long as player 1 does not deviate from A: If player 1 deviates from A, i.e., if player 1 plays B, player 2 chooses N in the next period and all future periods. How large needs to be, such that player 1 has no incentive to depart from A in the first period? 062/1/1/00 082 / 0. 062 1/1/000 062/1 None of the answers is correct.

Consider the following game in normal form. Player 2 L N Player A 8,11 0,0 1 B9,-1 0.5,5 Assume that the game will be repeated infinitely many times, and that player 2 is playing a grim trigger strategy. That is, he starts in the first period with L and plays L as long as player 1 does not deviate from A: If player 1 deviates from A, i.e., if player 1 plays B, player 2 chooses N in the next period and all future periods. How large needs to be, such that player 1 has no incentive to depart from A in the first period? 062/1/1/00 082 / 0. 062 1/1/000 062/1 None of the answers is correct.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the infinite repeated two-player game where at each stage the play- ers play the non-zero-sum game given by A В A (5, 5) (0,7) В (7, 0) | (2, 2) (a) Consider the following strategies: SA: always play A. SB: always play B. • St: play A on the first stage, thereafter copy what the other player did in the preceding stage. Suppose that the total payoff involves a discount factor 8, and that both players are restricted to the pure strategies SA, SB, and sT. Determine the set of d for which (ST, ST) is a Nash equilibrium. (b) Use the one stage deviation principle to determine whether the pair (ST, ST) is a subgame perfect Nash equilibrium for some range of val- ues of 8.
A 201.
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