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Consider the example of a Prisoners' Dilemma, as described in Figure
1. Often, in real world explanations the outcomes are not expressed in utility. Suppose these represented changes in wealth (e.g. so -0.50 means "lose 50 cents").
Player 2
X R
Player 1 X (-0.50, -0.50) (+1.50, -1)
R (-1, +1.50) ( +1, +1)
Fig.1 Prisoner's Dilemma
What could the payoffs look like if the players were other regarding, that is they valued the outcomes of their "opponent" as themselves?
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This says that consumers hold 20% (c = 0.2) of their money as currency and the required reserve ratio is 37.5% (θ = 0.375). Demand for central bank money (Hd) is the total amount of currency being demanded plus the total demand for reserves. Solve fo..
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