Please Help. Thank you very much. Consider the following two player game: Comput
ID: 1248330 • Letter: P
Question
Please Help. Thank you very much. Consider the following two player game: Compute the Nash equilibrium (it is in mixed strategies). If the game is repeated once (played twice), is there a SPE where (M,C) is played in the first round? Explain. For (c) and (d) below, assume that the game is repeated infinitely many times, and that players' discount factor is delta. As usual, payoffs are given by the average discounted sum of payoffs at each round. Players are allowed to choose randomized actions, and players are able to observe past randomizations (that is, players can observe the "coin flip" itself, and not only the resulting action). Show that there is a SPE that induces play of (M,C) at each round when delta is large enough. Fully describe the strategies of the players in this SPE. Show that there is a SPE where the discounted average payoffs are (close to) (5, 5) when delta is large enough. Fully describe the strategies of the players in this SPE. State the Folk Theorem and use the SPE you just found to explain it.Explanation / Answer
Hey, I don't have time to answer the entire question because I'mgoing out in a bit, but I quickly did a). Strategies M and C are strictly dominated for the respectiveplayers, so the Nash equilibrium reduces to the matrix (U, D x L,R). If I had more time I'd sit and think this one out, I'll try to getto the rest tomorrow if no one else has helped you out.