Answer to Question #124612 in Economics for Haruna Abdul-hafiz

Question

Question 5:
(a) Consider the tit-for-tat strategy in the repeated prisoner’s dilemma. Suppose that one player makes a mistake and defects when he meant to cooperate. If both players continue to play tit for tat after that, what happens?
(b) Are dominant strategy equilibria always Nash equilibrium strategy. Are Nash equilibria always dominant strategy equilibria?
(c) Suppose your opponent is not playing her Nash equilibrium strategy, should you play your Nash equilibrium strategy?
(d) We know that the one-shot prisoner’s dilemma game results in a dominant Nash equilibrium strategy that is Pareto inefficient. Suppose we allow the two prisoners to retaliate after their respective prison terms. Formally, what aspect of the game would this affect? Could a Pareto efficient outcome result?

Answer 1

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