game theory homework
Extend the model in the lecture in one direction (see below).Build a new game, explain what you did, justify the payoffs – and find Nash equilibrium or subgame perfect equilibrium.
Possible extensions:
- Number of countries
- Level of production
- Cost of production
- OPEC's oil reserves are shrinking over time. This shrinkage will eventually have an impact on the profitability of any production policy.
- The role of non-OPEC production.
- Research toward a disruptive technology (a new, cheaper way of exploiting oil deposits or alternative sources of energy).
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