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Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 Otters 2,000 Otters Produce 1,000 $500, $500 $250, $700 Otters Your Countn

Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 Otters 2,000 Otters Produce 1,000 $500, $500 $250, $700 Otters Your Countn

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Game Theory-End of Chapter Problem Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 2,000 Otters Otters Produce 1,000 SS00, $500 $250, $700 Otters Your Country Produce 2,000 $700, $250 $400, $400 Otters a. What stream of profits will you generate if you always cooperate and your opponent follows the tit-for-tat strategy? O 500 + 500d + 500d + 500d'+... O 700 + 250d + 500d + 500d'+... 400 + 400d + 400d + 400d +... O 700 + 400d + 400d + 400d +... against an opponent playing a tit-for-tat strategy? b. What stream of profits will you generate if you defect once O 700 + 400d + 400d + 400d +... 500 + 500d + 500d + 500d+... 400 +400d+ 400d + 400d +... O 700 + 250d + 500d + 500d²+... c. If d = 0.5, it worthwhile to defect against such an opponent. d. Defection is worthwhile for values of d In general, the value of defecting increases as d
Transcribed Image Text:Game Theory-End of Chapter Problem Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 2,000 Otters Otters Produce 1,000 SS00, $500 $250, $700 Otters Your Country Produce 2,000 $700, $250 $400, $400 Otters a. What stream of profits will you generate if you always cooperate and your opponent follows the tit-for-tat strategy? O 500 + 500d + 500d + 500d'+... O 700 + 250d + 500d + 500d'+... 400 + 400d + 400d + 400d +... O 700 + 400d + 400d + 400d +... against an opponent playing a tit-for-tat strategy? b. What stream of profits will you generate if you defect once O 700 + 400d + 400d + 400d +... 500 + 500d + 500d + 500d+... 400 +400d+ 400d + 400d +... O 700 + 250d + 500d + 500d²+... c. If d = 0.5, it worthwhile to defect against such an opponent. d. Defection is worthwhile for values of d In general, the value of defecting increases as d
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