a. We looked at the "team member's dilemma" which is an example of a prisoner's dilemma in a single period game but may lead to a high effort outcome in a multi-period game.

Consider a one period game where two team members have two strategies - to give high effort or low effort. If both give high effort the payoff is $12,000 for each. If they both give low effort their payoff is $8000 each. If one gives low effort and the other high effort, the one who gives low effort gets $16,000 and the one who gives high effort gets 2000.

Write out a multi period payoff matrix by using the technique used in class.Assume that one who starts with low effort continue with low effort and the others use a "tit for tat" strategy.Compute a "break-even probability" of future interaction that would induce cooperation.Explain when this probability means. Under what scenarios would this probability value become close to 1? Explain clearly.

b. Which market conditions make it difficult for implicit price fixing to be successful.