06 nash equilibrium dating and cournot mov
This can be expressed in normal form: ) which qualifies the donation game to be an iterated game (see next section). Similarly, for apple-grower Y, the marginal utility of an orange is b while the marginal utility of an apple is c.
If X and Y contract to exchange an apple and an orange, and each fulfills their end of the deal, then each receive a payoff of b-c.
In reality, humans display a systemic bias towards cooperative behavior in this and similar games, much more so than predicted by simple models of "rational" self-interested action.
If both defect, then neither one gains or loses anything.
If both players cooperate, they both receive the reward R for cooperating.
If both players defect, they both receive the punishment payoff P.
It has, consequently, fascinated many scholars over the years.
In 1975, Grofman and Pool estimated the count of scholarly articles devoted to it at over 2,000.