Reference no: EM132617303
Consider the version of the Prisoners' Dilemma shown in Figure 9.18.
a) Suppose the Prisoners' Dilemma in Figure 9.18 is repeated twice. What are the subgames to this new game?
b) If the Prisoner's Dilemma in figure 9.18 is repeated twice, what is the subgame perfect Nash equilibrium?
c) Explain how, if the discount factor is 1, the prisoners would be able to sustain cooperation if the game in Figure 9.18 is infinitely repeated.
d) Find the smallest value of the discount factor for which grim strategies support the cooperative outcome as a SPNE.
(Claim, Claim)=(6,6), (Claim, Rat) =(0,10), (Rat, Claim)= (10, 0), and (Rat, Rat)= (1,1).