Asked by Tanya Woods on May 16, 2024
Verified
In repeated games,credible threats are necessary for the players to reach a Nash equilibrium.
Credible Threats
Declarations or signals that a party intends to inflict harm or loss on another in the event of non-compliance, which are believable and likely to be carried out.
Nash Equilibrium
A concept in game theory where no player can benefit by changing their strategy while the other players keep theirs unchanged.
Repeated Games
A scenario in game theory where the same game (with the same strategy set) is played by players multiple times.
- Analyze the role of credible threats in achieving a Nash equilibrium in repeated games.
Verified Answer
VN
Valecia Nickerson-ReeceMay 23, 2024
Final Answer :
False
Explanation :
In repeated games, players can reach a Nash equilibrium through strategies that are not necessarily based on credible threats; cooperation and punishment strategies that do not rely on credible threats can also lead to a Nash equilibrium.
Learning Objectives
- Analyze the role of credible threats in achieving a Nash equilibrium in repeated games.