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Two peasants receive a payoff of s if they cooperate in a given stage game of a solidarity agreement. A peasant receives r > s
Two peasants receive a payoff of s if they cooperate in a given stage game of a solidarity agreement. A peasant receives r > s if he defects and doesn't help his partner in any given period, giving the defectee a payoff of zero. If they both defect, they gett, which is less than s but greater than zero. Assume both peasants play a Grim Trigger strategy. What is the minimum discount rate for the peasants in terms of the payoffs that allows them to sustain a solidarity network?
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