PS 19 repeated games

PS 19 repeated games - Intermediate Microeconomics, Winter...

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Intermediate Microeconomics, Winter 2008 Problem Set No 19 due: Wednesday, April 2; Thursday, April 3 Reading: Chapter 11, 12. We will talk about the monopolist but we will not cover all of these chapters. You might want to read parts of them to get an idea, in particular, Chapter 12 on price discrimination, pp 404 - 430. in many towns. He faces potential competitors in each town, who will be able to choose IN or OUT. They do so in sequential order and one at a time. If a potential competitor chooses to stay OUT, he receives a payo/ of 1, while A receives a payo/ of 5. If he chooses to go IN, he will receive a payo/ of either 2 or 0, depending on the response of Player A to his action. Player A, in response to a choice of IN, must choose one of two pricing strategies, COOPER- ATIVE or AGGRESSIVE. If he chooses COOPERATIVE, both player A and the competitor receive a payo/ of 2, and if A chooses Aggressive, each player receives a payo/ of 0. The monopolist discounts future payo/s with a discount factor = 0 : 9 . Suppose the monopolist chooses the following strategy: "Be aggressive when- ever someone enters if no cooperation happened in the past. If you, as the mo-
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This note was uploaded on 12/10/2011 for the course ECON 401 taught by Professor Burbidge,john during the Winter '08 term at Waterloo.

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PS 19 repeated games - Intermediate Microeconomics, Winter...

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