Calculate the value of delta , Macroeconomics

Consider the following prisoners' dilemma game.

 

 C

D

C

4,4

0,6

D

6,0

1,1

Suppose that this game is repeated innately and consider the following Tit-for-tat" strategy:

Choose C in period 1 and then do whatever your opponent did last period".

(a) For what values of δ, if any, both players choosing the \Tit-for-tat" strategy is a SPE?

Consider now the \Pavlov" strategy: \Choose C in period 1. Choose C after any history in which the outcome in the last period is either (C;C) or (D;D). Choose D after any other history."

(b) For what values of δ, if any, both players choosing the \Pavlov" strategy is a SPE?

 

Posted Date: 3/9/2013 3:30:11 AM | Location : United States







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