Rabin (1993) argues that if we assume reciprocal preferences then it is possible to transform the...

 

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Rabin (1993) argues that if we assume reciprocal preferences then it is possible to transform the prisoner's dilemma game into a stag-hunt game with two payoff ranked equilibria. (a) Write down the payoff matrix for a representative prisoner's dilemma game. (b) Then clearly explain how the Rabin argument works. In doing so you must (c) Show a second payoff matrix to illustrate any changes in the payoffs from the first payoff matrix that you created. Explain how this second game has two payoff ranked equilibria. Rabin (1993) argues that if we assume reciprocal preferences then it is possible to transform the prisoner's dilemma game into a stag-hunt game with two payoff ranked equilibria. (a) Write down the payoff matrix for a representative prisoner's dilemma game. (b) Then clearly explain how the Rabin argument works. In doing so you must (c) Show a second payoff matrix to illustrate any changes in the payoffs from the first payoff matrix that you created. Explain how this second game has two payoff ranked equilibria.