Team 2 plays A Team 2 plays Team 1 plays A 0, 24 10, 10 Team 1 plays B 4, 4 24, 0 Consider the infinitely repeated version of the game above. Which of the follow the smallest discount factor such that the grim trigger strategy under which tear plays A and team 2 plays B until a team deviates, after which team 1 plays B fore and team 2 plays A forever is a Nash Equilibrium? O 1/100 1/2 01 3/4

Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
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Chapter15: Strategic Games
Section: Chapter Questions
Problem 6MC
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Team 2 plays A
Team 2 plays B
Team 1 plays A
0, 24
10, 10
Team 1 plays B
4, 4
24, 0
Consider the infinitely repeated version of the game above. Which of the following is
the smallest discount factor such that the grim trigger strategy under which team 1
plays A and team 2 plays B until a team deviates, after which team 1 plays B forever
and team 2 plays A forever is a Nash Equilibrium?
1/100
1/2
3/4
Transcribed Image Text:Team 2 plays A Team 2 plays B Team 1 plays A 0, 24 10, 10 Team 1 plays B 4, 4 24, 0 Consider the infinitely repeated version of the game above. Which of the following is the smallest discount factor such that the grim trigger strategy under which team 1 plays A and team 2 plays B until a team deviates, after which team 1 plays B forever and team 2 plays A forever is a Nash Equilibrium? 1/100 1/2 3/4
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