Since the game is symetric are we assuming Delta is the same for each or is 9/17 simply a threshold and they each have different Delta's I ask because it would seem to me if it's the same Delta for both then it would seem to me both forms would choose to cheat at the same time reducing the payoffs to strictly worse ones I'm enjoying the series
Here, we have assumed that the firms have identical discount factors. Relaxing this is simple. The 9/17 cutpoint is calculated the same way for each firm, and you need each firm to be willing to follow the cartel's rules for the cartel to work. Thus, the cartel can only work if delta_1 > 9/17 AND delta_2 > 9/17.
How is this channel not blowing up!! Concepts and videos are amazingly simple and effective..
Cartel? More like “This is swell!” Thanks for another amazing video.
Hi, at 0:47 you said in Cournot Competition firms' profit is equal to 0 but I think this is not quite correct. I think what you mean is Bertrand?
I said that profit is relatively low, not zero. That's an importance distinction!
(Profits are indeed zero under a symmetric Bertrand game, though..)
@@Gametheory101 Thank you for your answer. Happy New Year!
Thank you so much!!! It helped me a lot.
Since the game is symetric are we assuming Delta is the same for each or is 9/17 simply a threshold and they each have different Delta's I ask because it would seem to me if it's the same Delta for both then it would seem to me both forms would choose to cheat at the same time reducing the payoffs to strictly worse ones I'm enjoying the series
Here, we have assumed that the firms have identical discount factors. Relaxing this is simple. The 9/17 cutpoint is calculated the same way for each firm, and you need each firm to be willing to follow the cartel's rules for the cartel to work. Thus, the cartel can only work if delta_1 > 9/17 AND delta_2 > 9/17.