7. (10 pts. Consider a prisoner's dilemma game of the following. Ben Alex Confess Deny Confess (1,1) (0,20) Deny (20,0)
Posted: Mon Apr 18, 2022 9:14 am
- 7 10 Pts Consider A Prisoner S Dilemma Game Of The Following Ben Alex Confess Deny Confess 1 1 0 20 Deny 20 0 1 (12.81 KiB) Viewed 31 times
- 7 10 Pts Consider A Prisoner S Dilemma Game Of The Following Ben Alex Confess Deny Confess 1 1 0 20 Deny 20 0 2 (22.88 KiB) Viewed 31 times
b) Suppose that the prisoner's dilemma game is repeated once every year, forever. Firm i's payoff of the repeated game of the repeated game is a discounted sum of each year, starting with year 0. The payoff of the repeated game for Firm i is, Tt; = 2-oB! Ti je Where Tij is Firm i's jth year specific payoff. Suppose further that B = 0.9. Explain what a grim trigger strategy is in this game. Then, show (with calculations) how both firms using grim-trigger strategies is NOT a nash equilibrium. (4 pts.) c) Continuing from part b), what is the lowest value of that can support a grim-trigger strategy equilibrium? (4 pts.)