Player 1Cooperate (C)Defect (D)0 1OO 1.5Cooperate (C)3,38,03O 6Player 2If the game is repeated finitely many times, what happens in the last period in Nash equilibrium?Both players choose C.Player 1 chooses C, Player 2 chooses D.Player 1 chooses D, Player 2 chooses C.Both players choose D.Defect (D)0,81,1If the game is repeated infinitely many times, what is the value of 1's future payoffs when both cooperate forever? Assume thatthe discount factor is 0.5 (i.e. payoffs in the next period are worth half as much as payoffs today).

If the game is played only once then , If the player 1 choose cooperate then the best strategy for…

Player 1 Cooperate (C) Defect (D) Player 1 chooses C, Player 2 chooses D. Player 1 chooses D, Player 2 chooses C. Both players choose D. Cooperate (C) 3,3 8,0 1 1.5 3 6 Player 2 If the game is repeated finitely many times, what happens in the last period in Nash equilibrium? Both players choose C. Defect (D) 0,8 1, 1 If the game is repeated infinitely many times, what is the value of 1's future payoffs when both cooperate forever? As the discount factor is 0.5 (i.e. payoffs in the next period are worth half as much as payoffs today).

Player 1 Cooperate (C) Defect (D) Player 1 chooses C, Player 2 chooses D. Player 1 chooses D, Player 2 chooses C. Both players choose D. Cooperate (C) 3,3 8,0 1 1.5 3 6 Player 2 If the game is repeated finitely many times, what happens in the last period in Nash equilibrium? Both players choose C. Defect (D) 0,8 1, 1 If the game is repeated infinitely many times, what is the value of 1's future payoffs when both cooperate forever? As the discount factor is 0.5 (i.e. payoffs in the next period are worth half as much as payoffs today).

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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