{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

# a5smpa11 - Econ 485 Problem set 5 with answers Fahad Khalil...

This preview shows pages 1–2. Sign up to view the full content.

Econ 485 Fahad Khalil Problem set 5 with answers 1. Problem 2.10 from the book. 2. Problem 2.11 from the book. 3. Problem 2.13 from the book. 4. In class, we assumed that “deviation from cooperation” is immediately detected so that “retaliation” can occur the next period. Suppose deviations are no t detected immediately and a player can deviate for two periods before retaliation occurs. Calculate the critical delta for the prisoners’ dilemma game done in class and explain why it is different from what we found in class. Answer key 5: (2.10). After solving for the NE of the subgame according to the strategies specified, the players can anticipate them in the first stage as follows. It is enough to just present the relevant rows and columns. They imply that x cannot be higher than 6. P 1 Q 1 R 1 P 2 Q 2 R 2 S 2 2, 2 x, (0+2) (0+2), x (4+2), (4+2) (-1+2), 0 (0+2), 0 0, (0+2) 1, 0 2, 2 S 1 0, (-1+2) (2.11) First note that Row is the “problem player” who prefers to pla y T if Column plays R. Thus, the second stage play will be used by address this incentive problem.

This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document
This is the end of the preview. Sign up to access the rest of the document.

{[ snackBarMessage ]}

### What students are saying

• As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

Kiran Temple University Fox School of Business ‘17, Course Hero Intern

• I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

Dana University of Pennsylvania ‘17, Course Hero Intern

• The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

Jill Tulane University ‘16, Course Hero Intern