Learning Path
Question & Answer1
Understand Question2
Review Options3
Learn Explanation4
Explore TopicChoose the Best Answer
A
They will continually change their strategies to improve payoffs.
B
They will eventually reach a different equilibrium.
C
Their strategies will remain stable, maintaining the equilibrium payoff.
D
One player will always dominate the other in the long run.
Understanding the Answer
Let's break down why this is correct
Answer
In a repeated game context, when two players consistently choose strategies that lead to a Nash Equilibrium, they will likely continue to maintain that equilibrium over time. This happens because both players understand that if they change their strategy unilaterally, they would end up worse off, as the equilibrium is a stable state where neither player has an incentive to deviate. For example, imagine two friends deciding how to split a pizza; if they both agree on splitting it evenly and are happy with that, they will keep choosing that option in future orders. As they keep playing, their trust in each other grows, which reinforces their commitment to that strategy. Therefore, the most likely outcome is that they will keep sticking to the Nash Equilibrium, leading to stable and predictable results in their interactions.
Detailed Explanation
When players reach a Nash Equilibrium, they find a stable strategy. Other options are incorrect because Some might think players will always try to change to get better results; It's a common mistake to think players will find a new equilibrium.
Key Concepts
Nash Equilibrium
repeated games
Topic
Nash Equilibrium and Strategy Adjustments
Difficulty
medium level question
Cognitive Level
understand
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