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C P1 D E P2 D C E 5,5 0, x 0,0 x,0 3,3 0,0 0,0 0,0| 1,1

C P1 D E P2 D C E 5,5 0, x 0,0 x,0 3,3 0,0 0,0 0,0| 1,1

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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* Please be advised this is for practice preperation only ** i just really need help on this - I dont undertsand 

X is an arbitrary number 

Suppose the stage game was played for 3 rounds. Consider the following strategy:
 Round 1: play C.
 Round 2: play C if both players played C in round 1. Otherwise, play E.
 Round 3: play D if both players played C in rounds 1 and 2. Otherwise, play E.
Ignore discounting (that is, δ = 1). Suppose that both players pick the strategy above. What condition on x is needed to make this strategy profile a SPNE? Hint: remember to check for possible deviations separately for rounds 1 and 2.
(a) 5 ≥ x
(b) 7 ≥ x
(c) 9 ≥ x
(d) 11 ≥ x
(e) 13 ≥ x

C P1 D E P2 D C E 5,5 0, x 0,0 x,0 3,3 0,0 0,0 0,0| 1,1
Transcribed Image Text:C P1 D E P2 D C E 5,5 0, x 0,0 x,0 3,3 0,0 0,0 0,0| 1,1
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