Why Does Cooperative Behavior Break Down in Games with Finite

question 5

Multiple Choice

Why does cooperative behavior break down in games with finite endpoints?

• A) Each player has an incentive to deviate from a cooperative strategy during the last period.
• B) A Nash equilibrium in pure strategies is not possible in finite repeated games.
• C) Finite games have the same outcomes as one-period games, and cooperation is not possible in one-period games.
• D) A Nash equilibrium is only possible in mixed strategies in finite repeated games, but all of the probabilities assigned to particular strategies approach zero as the number of finite game periods becomes large. Thus, we cannot evaluate the expected payoffs in these games.

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Definitions:

Plus Four Method

A statistical method that adds four to the sample size and regards two successes and two failures in a binomial proportion confidence interval.

P-value

The probability of obtaining a test statistic at least as extreme as the one observed, assuming the null hypothesis is true; used to determine statistical significance.

Hypothesis

A supposition or proposed explanation made on the basis of limited evidence as a starting point for further investigation.

Confidence Interval

A span of values, generated from the statistics of a sample, that is likely to comprise the value of an undefined population parameter.