Finite/Infinite Flashcards
(3 cards)
1
Q
Finitely Repeated PD
A
Equilibrium is repeated defection
cooperation unravels as players know the game ends, thus defect every round
2
Q
Infinitely Repeated PD
A
SPE can be cooperation in every period if discount factor (delta) is high (players value future payoffs enough)
- cooperation can be sustained as threat of future punishment for defection (other firm defects forever) discourages betrayal today
3
Q
Equilibrium Cooperation
A
SPE and NE is cooperation
1. punishment strategies (other firm defects forever)
2. High discount factors
