Assignment Trigger Strategies

Published by Mario Oettler on

Game Theory & Blockchain Repeated Games and Sequential Games Assignment Trigger Strategies

Task

Suppose we have the following situation:

The game is repeated infinitely. Player B says (credibly) he plays grim trigger. A has a time preference of 0.9.

  1. Is it profitable for player A to cooperate?
  2. What time preference p would be necessary that A doesn’t want to cooperate anymore?

Solution

a)

Present Value with cooperation: PVC = 8*(1/(1-0.9)) = 80

Present Value with no cooperation: PVN = 11 + 2*(0.9/(1-0.9)) = 29

As PVC > PVN, cooperation is beneficial.

b)

For p < 1/3

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