Microeconomic Theory
Microeconomic Theory
12th Edition
ISBN: 9781337517942
Author: NICHOLSON
Publisher: Cengage
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12. The following table contains the possible actions and payoffs of players 1 and 2.
Player 1
a. 50
b.
Cooperate
Not Cooperate
C.
d.
e.
Player 2
This game is repeated 100 times, and at each period both players must choose their actions
simultaneously. The players are deciding whether or not to cooperate. They are considering a simple
agreement: Cooperate as long as no firm has deviated, and Not Cooperate forever if some firm deviates.
Players discount the future according to the interest rate r=0.60. In this case, how many times will the
players cooperate?
100
60
40
None of the above
Cooperate
450, 450
700, 100
Not Cooperate
100, 700
300, 300
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Transcribed Image Text:12. The following table contains the possible actions and payoffs of players 1 and 2. Player 1 a. 50 b. Cooperate Not Cooperate C. d. e. Player 2 This game is repeated 100 times, and at each period both players must choose their actions simultaneously. The players are deciding whether or not to cooperate. They are considering a simple agreement: Cooperate as long as no firm has deviated, and Not Cooperate forever if some firm deviates. Players discount the future according to the interest rate r=0.60. In this case, how many times will the players cooperate? 100 60 40 None of the above Cooperate 450, 450 700, 100 Not Cooperate 100, 700 300, 300
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