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Suppose that the following game, C DC 4, 4 0, 8D 5, 0 1, 1 is the stage game for a five-period repeated game.a) (1 point) Find the subgame perfect...
attached is the game chart
4. Suppose that the following game,
C DC 4, 4 0, 8D 5, 0 1, 1
is the stage game for a five-period repeated game.a) (1 point) Find the subgame perfect Nash equilibrium.b) (4 points) Now suppose the the game is modified in the following way: after period five,if both players played C in every period, they each get an additional bonus payment b.If either player played D in any of the five periods, neither player gets the bonus. Forwhat values of b does there exist a subgame perfect equilibrium in which both playersplay C every period and thus receive the bonus. Be sure to show your derivationclearly and fully specify the strategies.
