4 1 r) Consider the following stage game: Complete the payoff matrix following the instructions below: Player 1 X1 Player 2 Y1 Y2 -, - -, - X2 The stage game should represents players facing a prisoner's dilemma game (with asymmetric payoffs). Suppose now the stage game is repeated infinitely. Suppose additionally that both players adopt the grim trigger strategy. They continue to 'cooperate' until one of them cheats. If one of them defects, the other player will play the equilibrium strategy for the rest of the game. - Find the conditions in terms of discount factor (0) for cooperation to be sustainable.

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4 1 r) Consider the following stage game: Complete the payoff matrix following the instructions below:
Player 1
Player 2
Y1
Y2
X1
-, -
-, -
X2
The stage game should represents players facing a prisoner's dilemma game (with asymmetric payoffs).
Suppose now the stage game is repeated infinitely. Suppose additionally that both players adopt the grim trigger strategy. They continue
to 'cooperate' until one of them cheats. If one of them defects, the other player will play the equilibrium strategy for the rest of the game.
- Find the conditions in terms of discount factor (0) for cooperation to be sustainable.
Transcribed Image Text:4 1 r) Consider the following stage game: Complete the payoff matrix following the instructions below: Player 1 Player 2 Y1 Y2 X1 -, - -, - X2 The stage game should represents players facing a prisoner's dilemma game (with asymmetric payoffs). Suppose now the stage game is repeated infinitely. Suppose additionally that both players adopt the grim trigger strategy. They continue to 'cooperate' until one of them cheats. If one of them defects, the other player will play the equilibrium strategy for the rest of the game. - Find the conditions in terms of discount factor (0) for cooperation to be sustainable.
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