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Finally, I believe it is easy to answer it. Well, in case where some player will not cooperate and the triger strategy is enabled, we have the following soloutions: Soppuse that p2 does not cooperate in the first round so, he will gain a payoof of 1, but in the second round p1 plays $a_2$ and he won't cooperate with p2 in perpetual. Thus, we have that p2 ...


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It is a convoluted definition because condition 3: "At all $h$, if there exists a previously unclinchable payoff x that becomes impossible for agent $i_h$ at $h$, then $C_i^\subset (h) \subseteq C_i^h (h)$." means that at every history if there is a payoff that player $i_h$ could not have secured (or clinched), but was feasible at every previous history ...


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I don't think behavioral game theory is inspired much by biology. Rather it's motivated by the discrepancies between theoretical predictions and the choices observed in lab experiments. It seeks to improve the predictive accuracy of game theoretic models by introducing behavioral assumptions that allow players to behave in ways different from the traditional ...


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It would decrease consumption, lowering demand on many markets, meaning that prices would go down. If downsizing would rampant enough it's possible that economy would experience deflation, maybe even recession. As the result, maybe central banks would be decreasing key interest rates (i.e. make new debts cheaper), start buying bonds and lowering reserve ...


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Mixed strategy Nash equilibrium cannot involve strictly dominated strategies. In particular, Cooperate is strictly dominated for player 1 ($6<8$ and $3<4$). Therefore, no $b\in[0,1]$ can make player 1 indifferent between Cooperate and Non-cooperate. You made a mistake by trying to solve for $b$ by equating player 1's expected payoffs from his two pure ...


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The following proposition is well known: If a stage game $G$ has a unique Nash equilibrium, then for any finite $T$, the repeated game $G(T)$ has a unique subgame perfect equilibrium outcome in which the Nash equilibrium of $G$ is played in every stage. Since your stage game has a unique NE of $(T,R)$, this must be the outcome of the SPE of any finitely ...


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Interesting questions. To go through the list of questions you have... Is there a more efficient mechanism? Will it be better to pay the lowest bidder the amount of the second lowest bid? According to the revenue equivalence theorem, both types of auctions will result in the same expected revenue to the "cleaner," and will result in the same person doing ...


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There are a couple of imprecisions. First, there are 3 subgames: two that start with player 2 moving, and the complete game is also a subgame. Second I think that A is a best response for player 1 iff $r\geq \frac{z-y}{x-y}$ otherwise, B is the best response (perhaps this was just a typo). Third, note that the fraction is guaranteed to be positive and ...


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