12. The following table contains the possible actions and payoffs of players 1 and 2. Player 2 Player 1 Cooperate Not Cooperate a. 50 b. 100 Cooperate 450, 450 700, 100 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? c. 60 d. 40 e. None of the above Not Cooperate 100, 700 300, 300

12. The following table contains the possible actions and payoffs of players 1 and 2. Player 2 Player 1 Cooperate Not Cooperate a. 50 b. 100 Cooperate 450, 450 700, 100 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? c. 60 d. 40 e. None of the above Not Cooperate 100, 700 300, 300

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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