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In: Economics

In Chapter 1 the Nash Equilibrium in the Assurance Game illustrate the possibility of a “poverty...

In Chapter 1 the Nash Equilibrium in the Assurance Game illustrate the possibility of a “poverty trap" for the farmers of Palanpur, India. Evaluate if the following statement is True or False & Explain why. a. History and “path dependence" have a role to play in determining which equilibrium players end up in.

Solutions

Expert Solution

True history and path dependence have a nojor role to play in determining which equilibrium the players end up in. Because any player learns with the experience. His past experience with his strategies and with his rivals will decide his actions and his future strategies. So history and path dependence matters.


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