# hw11b - S11 Prof Stahl 354K Problem Set No 11b Due Thurday...

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S’11 Prof. Stahl 354K Problem Set No. 11b Due Thurday, April 28 1. Refer to the Game of Chicken in HW11a. Graph the feasible payoffs, find the minmax point, and the set of individually rational payoffs. 2. Infinitely Repeated Chicken . Suppose the above game of chicken is played infinitely often, and both players discounted per-period payoffs with a discount factor δ (0,1). Consider the following grim strategy. Play C in period 1 and in any period which has a history of everyone playing C. However, in any period in which someone has played S in the past, play the mixed-strategy Nash equilibrium of the one-shot game forever thereafter. (a) What is the minimum δ for which this a subgame perfect Nash equilibrium? Consider the following strategy. Play C in period 1. As long as both players have used the same action in every past period, play C in the current period. If different actions were chosen in some past period, let t* denote the first such period when the players chose different actions. Then choose

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## This note was uploaded on 06/09/2011 for the course ECON 354 taught by Professor Econ during the Spring '11 term at University of Texas.

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hw11b - S11 Prof Stahl 354K Problem Set No 11b Due Thurday...

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