A5smpa11 - 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

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Unformatted text preview: 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 not 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 play T if Column plays (2....
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This note was uploaded on 07/10/2011 for the course ECON 485 taught by Professor Eric during the Spring '11 term at Punjab Engineering College.

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A5smpa11 - 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

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