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QUESTION 3 Player A 1,17,1 B 1,-1 4,5 Player I Consider the stage game above and suppose it is repeated twice without discounting. There exist a SPNE in which the first period outcome is (B,D). To support this SPNE player 1 plays action B in the first period and action period, and plays action in the second period. Player 2 plays action D in the first in the second if the first period outcome was (B,D) and plays action otherwise
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Answer #1

Answer:

Given data :

player 2
player 1 C D
A 1,1 7,1
B 1,-1 4,5

Now, we can say that :

  • Each player 1 can make a move An and B and player 2 can make a move C and D .
  • Thus, player 1 is plays activity B in the first time frame then it needs to play activity " A " in the second time frame .
  • Because he has just two alternatives An or B and if player 2 activity B in the first time frame.
  • what's more, plays activity "C" in the second time frame
  • if the first time frame results fix ( B, D) and play activity "C " generally.
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