For each one of the following four versions of the prisoner's dilemma, find the range of discount factors ₁ and 2 such that cooperation (the outcome (C, C)) can be sustained as a subgame perfect equilibrium if the game is repeated infinitely many times: C D C 5,7 6, -1 D -2,9 0,0 1 C D C 3,2 4, -2 D -1,5 0,0

For each one of the following four versions of the prisoner's dilemma, find the range of discount factors ₁ and 2 such that cooperation (the outcome (C, C)) can be sustained as a subgame perfect equilibrium if the game is repeated infinitely many times: C D C 5,7 6, -1 D -2,9 0,0 1 C D C 3,2 4, -2 D -1,5 0,0

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

4. For each one of the following four versions of the prisoner's dilemma, find the range of
discount factors ₁ and ₂ such that cooperation (the outcome (C, C)) can be sustained
as a subgame perfect equilibrium if the game is repeated infinitely many times:
1
1
2
с
D
2
C
D
C
5, 7
6, -1
(i)
с
1, 1
2, -1
(iii)
D
-2,9
0,0
D
-4, 2
0,0
1
1
C
D
C
D
C
3, 2
4, -2
(ii)
C
10, 1
15, -1
(iv)
D
-1,5
0,0
D
-1, 3
0,0

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