Question
Consider the static game represented by the following payoffmatrix: c r C 2;2 0;3 R 3;0 1;1 (a) Find the Nash equilibrium of the above
Consider the static game represented by the following payoffmatrix: c r C 2;2 0;3 R 3;0 1;1
(a) Find the Nash equilibrium of the above game.
(b)If above static game is repeated T < 1 times without discounting of payoffs, what will be its subgame perfect Nash equilibrium?
(c) If the above static game is repeated an infinite number of times with payoff discount factor being = 1 1+, what will be its subgame perfect Nash equilibrium? Interpret the economic meaning of parameter . Explain the intuition how parameter can affect the equilibrium outcome of the game.
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