2013-1 Midterm

Left right top 010 b0 bottom 10a xy a 6 define

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Unformatted text preview: der the following simultaneous-move 2x2 game. Left Right Top 0,10 b,0 Bottom 10,a x,y a) [6] Define prisoner’s dilemma. What conditions do a,b,x,y have to satisfy for this game to be a prisoner’s dilemma? For parts b and c, assume that the above game is indeed a prisoner’s dilemma (so that the conditions from part a hold) and is repeated infinitely many times. b) [5] State player 1’s grim trigger strategy. c) [9] Suppose both players have discount factor 0.8. Find and explain the conditions on a,b,x,y (in addition to those from part a) so that both players playing their grim trigger strategy is a subgame-perfect equilibrium....
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