Suppose that both players discount future payoffs with the same discount factor ? < 1. Suppose that both players play the "Cooperative Strategy;" namely, they play C in every period, no matter what was the outcome in the previous period. Do these strategies form a Nash Equilibrium of the repeated game? For what values of ? ? Do they form an SPNE for some values of ? ? Find them all.

Transcribed Image Text:

6. Consider again the following infinitely repeated PD game we discussed in class: P1 C P2 C D 5,5 0,6 D 6,0 1,1 Suppose that both players discount future payoffs with the same discount factor 8 < 1. Suppose that both players play the "Cooperative Strategy;" namely, they play C in every period, no matter what was the outcome in the previous period. Do these strategies form a Nash Equilibrium of the repeated game? For what values of 8? Do they form an SPNE for some values of 8? Find them all. 6. Consider again the following infinitely repeated PD game we discussed in class: P1 C P2 C D 5,5 0,6 D 6,0 1,1 Suppose that both players discount future payoffs with the same discount factor 8 < 1. Suppose that both players play the "Cooperative Strategy;" namely, they play C in every period, no matter what was the outcome in the previous period. Do these strategies form a Nash Equilibrium of the repeated game? For what values of 8? Do they form an SPNE for some values of 8? Find them all.

Answer rating: 100% (QA)

To determine if the Cooperative Strategy of playing C in every period forms a Nash Equilibrium NE of ... View the full answer