Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 2,000 Otters Otters Produce 1,000 5500, SS00 s250, 5700 Otters Your Country Produce 2,000 $700, $250 s400 5400 Oters a. What stream of profits will you generate if you always cooperate and your opponent follows the tit-for-tat strategy O s00 + 500d + 500d + 500d'+.. 400+ 400d + 400d + 400d + .. 700+250d +S0 700 + 400d + 400d + 4004 + .. -s00d + 5004'+... b. What stream of profits will you generate if you defect once against an opponent playing a tit-for-tat strategy? 700+400d +400d + 4004 + 500 + 5004 + 500d² + 500d'+. O 700 + 250d + S00d + 500d'+... O 400 + 400d + 400d + 4004 +.. c. If d=0.5, it worthwhile to defect against such an opponent. d. Defection is worthwhile for values of d In general, the value of defecting increases as d

Consider the Organization of Otter Exporting Countries playing a repeated game. Payoffs from this game are depicted in the accompanying table. Assume, that your opponent is playing a tit-for-tat strategy rather than a grim trigger. Other Country Produce Produce 1,000 2,000 Otters Otters Produce 1,000 5500, SS00 s250, 5700 Otters Your Country Produce 2,000 $700, $250 s400 5400 Oters a. What stream of profits will you generate if you always cooperate and your opponent follows the tit-for-tat strategy O s00 + 500d + 500d + 500d'+.. 400+ 400d + 400d + 400d + .. 700+250d +S0 700 + 400d + 400d + 4004 + .. -s00d + 5004'+... b. What stream of profits will you generate if you defect once against an opponent playing a tit-for-tat strategy? 700+400d +400d + 4004 + 500 + 5004 + 500d² + 500d'+. O 700 + 250d + S00d + 500d'+... O 400 + 400d + 400d + 4004 +.. c. If d=0.5, it worthwhile to defect against such an opponent. d. Defection is worthwhile for values of d In general, the value of defecting increases as d

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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