Consider the following infinitely repeated game: 1/2C D с 22 -3,3 D 3,-3-2,-2 a. Start with C and continue playing C as long as neither player deviates. If any player deviates, play D from that point onwards. For what value of the discount factor will this strategy be subgame perfect. b. Start with C, D and alternate between C,D and D,C. In case of deviation, play D,D forever. Can this strategy be subgame perfect?

Consider the following infinitely repeated game: 1/2C D с 22 -3,3 D 3,-3-2,-2 a. Start with C and continue playing C as long as neither player deviates. If any player deviates, play D from that point onwards. For what value of the discount factor will this strategy be subgame perfect. b. Start with C, D and alternate between C,D and D,C. In case of deviation, play D,D forever. Can this strategy be subgame perfect?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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