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De Figueiredo (2002) - Electoral Competition Political Uncertainty And Policy Insulation (view source)
Revision as of 18:32, 28 May 2010
, 18:32, 28 May 2010no edit summary
Then one can solve for <math>\beta_A^*\,</math>, the threshold <math>\beta\,</math> if <math>A\,</math> defects as:
:<math>\underbrace{\sum_{t=0}^{\infty} \delta^t \beta}_{\mbox{Cooperate}} \ge \underbrace{1 + \sum_{t=1}^{\infty} \delta^t \gamma}_{\mbox{Defect and prob(elected)}=\gamma\,}\,</math>
:<math>\therefore \beta \ge 1-\delta + \delta \gamma\,</math>
Then cooperation can be sustained iff:
:<math>B \ge max( \beta_A^*, \beta_B^*)\,</math>.
Note that cooperation can not be sustained if <math>\beta < \frac{1}{2}\,</math>.
