Suppose that Rob and Coleen are playing an infinitely repeated version of the following game: Colleen...

 

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Suppose that Rob and Coleen are playing an infinitely repeated version of the following game: Colleen Rob A B A (2,2) (0,8) B (8,0) (4,4) Suppose also that Rob and Colleen have a discount factor of A. Consider the following strategy, called "Compromise": 1. In the first period, pick B 2. In every period after the first one, do the following: a. If my opponent has picked B in each of the previous periods, pick B again b. Otherwise, pick A from now on until the end of times. Part 1 (2 marks). State the no-defection condition for a player choosing this strategy if the other player is also choosing it. Part 2 (10 marks). Find the values of A for which (Compromise, Compromise) is a Nash Equilibrium Part 3 (3 marks). State with proper notation the path induced by (Compromise, Compromise) Now consider the following strategy, called "Naive": Always pick B. Part 4 (5 marks). State with proper notation the path induced by (Naive, Naive) Part 5 (10 marks). Is it possible to find values of A for which (Naive, Naive) is a Nash Equilibrium? Explain your answer. Suppose that Rob and Coleen are playing an infinitely repeated version of the following game: Colleen Rob A B A (2,2) (0,8) B (8,0) (4,4) Suppose also that Rob and Colleen have a discount factor of A. Consider the following strategy, called "Compromise": 1. In the first period, pick B 2. In every period after the first one, do the following: a. If my opponent has picked B in each of the previous periods, pick B again b. Otherwise, pick A from now on until the end of times. Part 1 (2 marks). State the no-defection condition for a player choosing this strategy if the other player is also choosing it. Part 2 (10 marks). Find the values of A for which (Compromise, Compromise) is a Nash Equilibrium Part 3 (3 marks). State with proper notation the path induced by (Compromise, Compromise) Now consider the following strategy, called "Naive": Always pick B. Part 4 (5 marks). State with proper notation the path induced by (Naive, Naive) Part 5 (10 marks). Is it possible to find values of A for which (Naive, Naive) is a Nash Equilibrium? Explain your answer.

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1 The nodefection condition for a player choosing the Compromise strategy is tha... View the full answer