Question one is for information only, I need question 4 4. Again, suppose the prisoner's dilemma in question 1 is played an infinite number oftimes. Assume a discount factor of 8 and the payoff for the entire game is the presentvalue of the payoffs from each stage. For what values of 8 can cooperation be achievedusing trigger strategies? 1. Suppose the following prisoner's dilemma is played twice with the payoff for the entiregame being the sum of the payoffs from the two stages. Assume there is no discounting.Player 1BPlayer 2B2,63,3A5,56,2a. What is the Nash equilibrium for stage two?b. Show what the game in stage 1 amounts to when the players anticipate the Nashequilibrium for stage 2.c. Provide the subgame-perfect outcome for this game.

Answered: Image /qna-images/answer/baafad06-563f-4de6-98c9-1e42792df345.jpg

4. Again, suppose the prisoner's dilemma in question 1 is played an infinite number of times. Assume a discount factor of 8 and the payoff for the entire game is the present value of the payoffs from each stage. For what values of 8 can cooperation be achieved using trigger strategies?

4. Again, suppose the prisoner's dilemma in question 1 is played an infinite number of times. Assume a discount factor of 8 and the payoff for the entire game is the present value of the payoffs from each stage. For what values of 8 can cooperation be achieved using trigger strategies?

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

See similar textbooks

Related questions

Q: . Given the increasing sensitivity of potential visitors for a tourism product that demonstrates…

A: " Since you have asked multiple questions,we will solve first question for you.If you want specific…

Q: Consider a pure exchange economy with two goods, 1 and 2, and two consumers, A and B, who have…

A: To find the Walrasian equilibrium, we have to find the optimal consumption condition for both agents…

Q: Philip, a resident of Calgary, has an income of $16, the price of A is $2, and the price of B is $1.…

A: Budget line shows the relationship between the price of goods , quantity of goods and income of…

Q: Required information The Briggs and Stratton Commercial Division designs and manufacturers small…

A: The company will be indifferent to the two systems if their uniform equivalent annual cost is equal.…

Q: How will each of the following scenarios impact the market for labour Worldwide demand for each…

A: The equilibrium in labor market is where the labor demand curve intersects the labor supply curve.…

Q: 11. First, prepare a graphic representation off the economy before the Biden Covid Bill. In th space…

A: The measure that depicts the intersection of the aggregate supply curve of the economy and the…

Q: Use the following table to compute the price of the four bonds: Face Value Maturity (years)…

A: Here, Bond Face value Maturity (years) Yield Coupon rate No. of compounding periods No. of…

Q: The total cost function for a product is C(x) = 875 ln(x + 10) + 1600, where x is the number of…

A: The cost function calculates the lowest possible cost of manufacturing a specified quantity of…

Q: vertical aggregate supply graph indicates that aggregate demand has no effect on: Group of answer…

A: Aggregate supply refers to the total amounts of goods and services which are manufactured and sold…

Q: In regard to monetary policies, nonactivists have various proposals. True or False: Some…

A: Stabilization policy seeks to keep an economy on an even keel by rising or decreasing interest rates…

Q: The Australian households are suffering from increased household energy expenditure. Therefore, the…

A: Economic efficiency refers to a state in which all resources are optimally allocated to best serve…

Q: Suppose that this rate-setting game is played by the banks infinitely many times. Each bank has a…

A: Grim trigger strategy refers to the strategy where both the players cooperate in each round until…

Q: How will each of the following scenarios impact the market for labour . The central bank conducts an…

A: The central bank of the country controls the money supply. Money demand depends on the interest…

Q: Assuming a capital budget of $125,000 and a 5 year life, what is the MARR? Project First Cost Annual…

A: Also known as hurdle rate , minimum acceptable rate of return, is the lowest rate of return that…

Q: issues 20-year $1,000 zero-coupon bonds. If you buy one of these bonds you will receive no interest…

A: Given price of zero coupon bond at end of 20 year = 1000 $ Time = 20 years Annual rate = 7.5 %

Q: A construction company is planning their projects for the year 2023. The company is considering the…

A: The break even point is defined as the one where the revenue that the firms generate is equal to the…

Q: Consider an oligopoly. Suppose that one of the firms has the option to move before its opponents…

A: An oligopoly is a market structure in which there are few large firms in the market. The rival firms…

Q: Harley worked for many years to save enough money to start his own residential landscape design…

A: External Rate of Return is defined as the rate of return on a project on any extra cash from a…

Q: A. In the resource market, what is the impact on the demand for coal if the price of the substitute…

Q: In a perfectly competitive market, the price of good A is $2. If a firm decides to raise its price…

A: Since you have asked multiple questions, we will answer the first question for you. For the other…

Q: Are nations with large underground economies likely to be happier or unhappier than one would…

A: Underground Economies are defined as economies that are parallel or shadow economies which include…

Q: 1. We've learned that the primary focus of the Federal Reserve is interest rates. Why would the…

A: Since you have asked multiple question, we will solve the first question for you. If you want any…

Q: suppose a city council imposes a new tax on land developers. Let’s analyze the short-run effects.…

A: Equilibrium occurs where the supply curve intersects the demand curve.

Q: 2.Using the demand and supply for loanable funds and the AD-AS model, illustrate what happens in the…

A: The aggregate demand–aggregate supply model, often known as the AD–AS model, is a kind of…

Q: Describe the impact on labor wages of physical capital-intensive manufacturing. That is how do…

A: Capital Intensive Manufacturing refers to a high level of investment in Capital i.e., Machinery,…

Q: A bank has $100 million of checkable deposits, $6 million of required reserves, and $2 million of…

A: Required reserve ratio the amount of assets that a bank will be required to hold at all times. A…

Q: Our firm’s accountants have put together the following table of costs. Generators Solar Panels…

A: Total profits = Total Revenue - Total Cost Total Cost = Total Variable Cost + Total Fixed Cost A…

Q: plain what happens to (ii) MS and (iii) interest tes hen the real economy expands (Y rises), the…

A: Since you have asked multiple question, we will answer first question for you. If you want any…

Q: After the budget deficit occurs, suppose the new equilibrium real interest rate is 6%. The following…

A: International Capital mobility is a very common phenomena which occurs in these times of globalized…

Q: Aggregate Demand is the prime mover of the economy." This statement was made by a: A. Classcal…

A: Aggregate demand is the sum of Consumption, Investment, government spending and net export. So, AD…

Q: Suppose that the tuna industry is in long-run equilibrium at a price of $5 per can of tuna and a…

A: An economic equilibrium is said to exist when all economic forces are in harmony. Economic…

Q: Isn't the market basket suppose to be base year units x current price? I can see we ended up with…

A: Basket includes a particular amount of quantity. So, The quantity included in basket are the…

Q: Which of the following is most likely to be a monopoly? local fast-food restaurant Olocal…

A: Monopoly is known as a market structure in which only one seller exists who has complete market…

Q: Tony's Tree Service is the only firm in a town that removes large trees. Tony invested in costly…

A: A market arrangement known as a monopoly has a single seller controlling the whole market. The…

Q: Find the consumer surplus, producer surplus and total surplus, given the following: Demand: P = -Q²…

A: Demand: P = − Q2 − 8Q + 70Supply: P = Q2 − 2Q+ 14

Q: The marginal damage cost equation for carbon monoxide (CO) in urban areas is: MDCU = 36E; The…

A: Abatement costs refer to total opportunity costs a potential emitter incurs while decreasing…

Q: An economy has full-employment output of 6,000. Government purchases, G, are 1,000. Desired…

A: National Saving is the aggregate of the private savings and the public savings in a country , this…

Q: In preparing for the upcoming holiday season, Fresh Toy Company (FTC) designed a new doll called The…

A: Fixed Cost =100000 Variable Cost = 29 per doll Normal Market price = 37 per doll Expected Demand is…

Q: You are working as a macroeconomist in econ mic affairs in your local country, and you are tasked…

A: As we know that Covid-19 has led to a global recessionary trend economies have been negatively…

Q: Challenges the civil society organizations facing today

A: Civil Society's is a social organizations and is a third sectors of the economy. These are different…

Q: From question 6, how much in terms of quantity must consumers demand less to eliminate the cost…

A: Demand curve is the graphical representation of demand schedule. Demand curve is downward sloping.…

Q: The Australian economy is a small open economy and allows its currency to float against other…

A: Australia is an open small economy that is allowed to influence the value of its currency in the…

Q: The type of market failure represented by the scenario is a/an Negative externality…

A: "Since you have asked multiple questions, we will solve the first question for you. If you want any…

Q: Suppose the central bank of a small country is faced by a rise in the world interest rate. What is…

A: Shocks in the big country can be classified as either real or monetary, depending on whether they…

Q: f the actual unemployment rate falls below the natural unemployment rate, how does the actual…

A: The level of prices will keep on accelerating (i.e. positive changes in rate of inflation) when the…

Q: Calculate the real GDP for 2011, 2012 and 2013

A: Real GDP is the product of current year quantity and base year price. This means Real GDP =…

Q: Please submit the answer and then watch the video feedback. Farmer Ted sells 1,000 bushels of wheat…

A: A perfectly competitive firm maximizes profit by producing output at a level where Price is equal to…

Q: Consider the following table which shows a consumer's amount of expenditure on 3 different bundles,…

A: This axiom states that if the consumer has made a choice in buying a product or service over any…

Q: In the long-run, aggregate production is determined by the side of the economy while in the short…

A: Investment is function of rate of interest and expected profitability accounting to Keynes.

Q: Suppose the cross-elasticity of demand between two products, A and B, is negative. If the price of…

A: Products that work well together, like bread and jam, are said to be complementary. Soft drinks are…

Question

100%

Question one is for information only, I need question 4

4. Again, suppose the prisoner's dilemma in question 1 is played an infinite number of
times. Assume a discount factor of 8 and the payoff for the entire game is the present
value of the payoffs from each stage. For what values of 8 can cooperation be achieved
using trigger strategies?

1. Suppose the following prisoner's dilemma is played twice with the payoff for the entire
game being the sum of the payoffs from the two stages. Assume there is no discounting.
Player 1
B
Player 2
B
2,6
3,3
A
5,5
6,2
a. What is the Nash equilibrium for stage two?
b. Show what the game in stage 1 amounts to when the players anticipate the Nash
equilibrium for stage 2.
c. Provide the subgame-perfect outcome for this game.

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 2 steps with 2 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.

Similar questions

Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing self-interest? Explain briefly.
1) Suppose that Player A can take two actions, either Up or Down. Player A is thinking to choose Up 50 percent of the time, and Down 50 percent of the time. This type of strategy is called a ____ ? 2) Consider a payoff matrix of a game shown below. In each cell, the number on the left is a payoff for Player A and the number on the right is a payoff for Player B. In order for (Down, Right) to be a unique pure strategy Nash equilibrium, a must be (greater, or smaller) than 3 and b must be (greater, or smaller) than 3. refer to image
H3. Cooperation in a Finite Game We have seen that if we play the Prisoners' dilemma with finite repetition, there will be no cooperation in the subgame-perfect equilibrium. There are other games, however, when cooperation can be enforced for at least some time in a finite repetition as well. Give an example with explanation. (Hint: consider games with more than one Nash equilibria.)
Consider the location game we covered in Lecture 3. Now assume there arethree players (vendors). As we assumed in the lecture, consumers in each area choosethe closest vendor and if there are multiple closest vendors then these vendors receiveequal share of consumers in the area. Notice Si = {1, 2, 3, ...., 9} for i = 1, 2, 3. Here aresome examples of payoffs: u1(1, 1, 1) = 3, u1(1, 1, 9) = u2(1, 1, 9) = 2.25, u3(1, 1, 9) =4.5, u1(1, 5, 9) = u3(1, 5, 9) = 2.5 and u2(1, 5, 9) = 4. (a) Is s′1 = 1 strictly dominated by s′′1 = 2 for player 1?(b) Is s′1 = 1 weakly dominated by s′′1 = 2 for player 1?(c) Can you find a Nash equilibrium in pure strategies?
Consider the game with the payoffs below. Which of the possible outcomes are MORE efficient than the Nash Equilibrium (NE)? Note, they do NOT need to be Nash equilibria themselves, they just need to be more efficient than the NE. Multiple answers are possible, but not necessary. You need to check ALL correct answers for full credit. JILL High Medium LowMAGGIE Left 3,4 2,3 2,2Center 4,8 9,7 8,7Right 7,6 8,5 9,4Group of answer choices (Left, Low) There is no strategy combination that is more efficient than the Nash equilibrium for this game. (Right, Medium) (Left, High) (Center, Medium) (Center, High) (Center, Low) (Left, Medium) (Right, Low) (Right, High)
(a) Assuming that each fishery chooses fi ∈ (0, F), to maximize its payoff function, derive the players’ best response functions and find a Nash equilibrium. (b) Is the equilibrium you found in (a) unique or not? What are equilibrium payoffs? 4 (c) Suppose that a benevolent social planner wants maximize the utility of both fisheries. In other words, the social planner solves the following problem: max w(f1,f2) w(f1, f2) = u1(f1, f2) + u2(f1, f2) =2 ln(f1) + 2 ln(f2) + 2 ln(F − f1 − f2). Find the social planner’s solution. (d) What are the fisheries’ payoffs if the quantities of fish they catch are solutions to the social planner’s problem? What can you say about the Nash equilibrium quantities of fish being caught as compared to the social planner’s solution? (e) If fishery j decides to follow the recommendation of the social planner, how much fish will firm i catch?
Paramter y = 0 If ⟨a, d⟩ is played in the first period and ⟨b, e⟩ is played in the second period, whatis the resulting (repeated game) payoff for the row player?
A) What is the suitable strategy that best describe "prisoner dilemma" above? B) What is the most likelihood of decisions will be made by Ronaldo and Gonzalo?In which quadrant? Why they think that the decision is the best option for them?
5) Suppose that the letter grade earned on a test for each student in a class depends upon how well he/she does relative to other students in the class. This exhibit shows a prisoner’s dilemma setting for two representative students in the class, George and Gina. What is the expected final Nash Equilibrium? a) Study 4 hours for both Gina and George. b) Study 2 hours for both Gina and George. c) George studies for 2 hours, and Gina studies for 4 hours. d) George studies for 4 hours, and Gina studies for 2 hours.
Refer to the payoff matrix in question 8 at the end of this chapter. First, assume this is a one-time game. Explain how the $60/$57 outcome might be achieved through a credible threat. Next, assume this is a repeated game (rather than a one-time game) and that the interaction between the two firms occurs indefifi nitely. Why might collusion with a credible threat not be necessary to achieve the $60/$57 outcome?
Consider a modified Traveler’s Dilemma. In terms of strategy options that the players have and the dollars they earn, it is like the standard Traveler’s Dilemma, but the players do not have endless appetite for money. Up to 100 dollars, each dollar feels like a dollar. But any moneybeyond 100 is psychologically like 100 dollars. Assuming that players are maximizers of ‘psychological’ dollars instead of real dollars, describe all the Nash equilibria of this modified Traveler’s Dilemma.
(a) Assuming that each fishery chooses fi ∈ (0,F), to maximize its payoff function, derive the players’ best response functions and find a Nash equilibrium. (b) Is the equilibrium you found in (a) unique or not? What are equilibrium payoffs? (c) Suppose that a benevolent social planner wants maximize the util- ity of both fisheries. In other words, the social planner solves the following problem: max w(f1, f2) = u1(f1, f2) + u2(f1, f2) (f1 ,f2 )= 2ln(f1)+2ln(f2)+2ln(F −f1 −f2). Find the social planner’s solution. (d) What are the fisheries’ payoffs if the quantities of fish they catch are solutions to the social planner’s problem? What can you say about the Nash equilibrium quantities of fish being caught as compared to the social planner’s solution? (e) If fishery j decides to follow the recommendation of the social planner, how much fish will firm i catch?