Assume that we have a two-player, static game with complete information with the following payoffs. Left...

Assume that we have a two-player, static game with complete information with the following payoffs.

	Left	Right
Up	8, 8	0, 10
Down	10, 0	4,4

a. Determine the pure strategy Nash equilibrium(s) for this game.

b. Assume that this game is played two times only. Both players know that the game will be played only twice. What is the Nash equilibrium for this game? Explain your reasoning.

c. Assume that this game is played an infinite number of times with the same players and that both players have the same discount factor R. What must R equal for there to be an equilibrium of (Up, Left) at each stage of the game? Note: there is no uncertainty about the game continuing to subsequent stages.

Solutions

Expert Solution

a. The pure strategy Nash equilibrium is (down, right) with payoff of (4,4).

For further doubts or queries please comment!

Rahul Sunny answered 1 year ago

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