Question
4. Consider the following game which is infinitely repeated. Advertise Don't Advertise Advertise 6 , 6 10 , 5 Don't Advertise 5 , 10 8
4. Consider the following game which is infinitely repeated.
Advertise | Don't Advertise | |
Advertise | 6 , 6 | 10 , 5 |
Don't Advertise | 5 , 10 | 8 , 8 |
a) What is the maximal interest rate that can support collusion assuming both players use a trigger strategy?
b) Is the following a valid strategy for this game? "Start off cooperating. Continue to pick the cooperative action as long as my opponent has". State yes or no and briefly explain (excessively long answers will be penalized).
c) Is the following a valid strategy for this game? "Pick Don't Advertise for the first 10,000,000 periods. Thereafter, pick Advertise whenever the period I am playing is a prime number, and otherwise flip a fair coin and play Don't Advertise when it lands heads and Advertise when it lands tails." State yes or no and briefly explain (excessively long answers will be penalized).
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