Asked by Heather Jenkins on Jul 11, 2024
Verified
In repeated games,players may be willing to accept lower payoffs in the short run in exchange for greater net payoffs over the long run.
Repeated Games
In game theory, repeated games are those where the same game (with the same payoffs to strategies) is played more than once, allowing for strategy development over time based on past outcomes.
Payoffs
The outcomes or returns from an action or investment, notably used in the context of game theory to represent the consequences faced by participants.
Short Run
In economics, a period during which at least one of a firm's inputs is fixed, limiting its capacity to adjust to changes in demand.
- Discern the strategic considerations and benefits in repeated games, including short-term sacrifices for long-term gains.
Verified Answer
SS
Satwinder SinghJul 12, 2024
Final Answer :
True
Explanation :
This is known as the "shadow of the future" effect, where players' behavior in the current round is influenced by the potential impact on future rounds. Players may choose to cooperate and accept lower payoffs in the short run if it increases the likelihood of their opponent reciprocating in future rounds, leading to greater net payoffs in the long run.
Learning Objectives
- Discern the strategic considerations and benefits in repeated games, including short-term sacrifices for long-term gains.