Use the following normal-form game to answer the questions below.

a. Identify the one-shot Nash equilibrium.b. Suppose the players know this game will be repeated exactly three times. Can they achieve payoffs that are better than the one-shot Nash equilibrium? Explain.c. Suppose this game is infinitely repeated and the interest rate is 5 percent.Can the players achieve payoffs that are better than the one-shot Nash equilibrium? Explain.d. Suppose the players do not know exactly how many times this game will be repeated, but they do know that the probability the game will end after a given play is θ. If θ is sufficiently low, can players earn more than they could in the one-shot Nashequilibrium?

Transcribed Image Text:

Player 2 Strategy 10, 10 60, -5 50, 50 Player 1 -5, 60