Suppose the stage game was played an infinite amount of times, and let x = 13: P2 C D E 5,5 0,13 0,0 13,0 3,3 0,0 0,0 0,0 1,1 C P1 D E Now consider the following strategy: • In the first round, play C In all future rounds: If both players played C in all previous rounds, play C. - Otherwise, play E. Let the discount factor for both players be 8 € (0,1). What is the lowest value of such that both players using this strategy can be a SPNE? (a) This strategy profile is a SPNE for any & € (0,1) 9 (b) 8 > 2/3 13 (c) 8> ²/ 1 (d) 8 > }/ 3 (e) This strategy profile cannot be a SPNE for any 8 € (0, 1)
Suppose the stage game was played an infinite amount of times, and let x = 13: P2 C D E 5,5 0,13 0,0 13,0 3,3 0,0 0,0 0,0 1,1 C P1 D E Now consider the following strategy: • In the first round, play C In all future rounds: If both players played C in all previous rounds, play C. - Otherwise, play E. Let the discount factor for both players be 8 € (0,1). What is the lowest value of such that both players using this strategy can be a SPNE? (a) This strategy profile is a SPNE for any & € (0,1) 9 (b) 8 > 2/3 13 (c) 8> ²/ 1 (d) 8 > }/ 3 (e) This strategy profile cannot be a SPNE for any 8 € (0, 1)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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* Please be advised this is for practice preperation only ** i just really need help on this - I dont undertsand
Transcribed Image Text:Suppose the stage game was played an infinite amount of times, and let x = 13:
P2
C
D
E
5,5 0,13 0,0
13,0
3,3
0,0
0,0 0,0 1,1
C
P1 D
E
Now consider the following strategy:
• In the first round, play C
In all future rounds:
If both players played C in all previous rounds, play C.
- Otherwise, play E.
Let the discount factor for both players be 8 € (0,1). What is the lowest value of
such that both players using this strategy can be a SPNE?
(a) This strategy profile is a SPNE for any & € (0,1)
9
(b) 8 > 2/3
13
(c) 8> ²/
1
(d) 8 > }/
3
(e) This strategy profile cannot be a SPNE for any 8 € (0, 1)
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