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Consider the prisoners' dilemma game below. 5.1 5.2 Boxer High price Low price Usave High price 5000, 5000 6000, 1000 Low price 1000, 6000 3000,

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Consider the prisoners' dilemma game below. 5.1 5.2 Boxer High price Low price Usave High price 5000, 5000 6000, 1000 Low price 1000, 6000 3000, 3000 Suppose that the same players play this game every year, with infinite repetition. Boxer's discount rate is 15% per year. If Usave is playing a Tit-forTat strategy, is it profitable (relative to choosing High price every round) for Boxer to a) choose Low price for one year only, and b) choose Low price every year? Show calculations. [5] By reference to this game, explain why highly impatient people may find it difficult to sustain cooperative relationships with other people. [2]

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