
Matthew S. answered 04/21/20
PhD in Mathematics with extensive experience teaching Calculus
The problem statement really should say that b > c. Otherwise, no organism would have incentive to cooperate.
We're told that r(q) = q · r¯C + (1 − q) · r¯D = q · (p(b − c/2) + (1 − p)(b − c)) + (1 − q) · pb,
where p = Prob(A cooperates) and q = Prob(B cooperates).
Collecting like terms and simplifying,
r(q) = { p[b - c/2) - (b - c)] + b - c - pb }q + pb
This is a line, and the part in the curly brackets is the slope.So, simplifying the part in the curly brackets, we have
slope = { p[b - c/2) - (b - c)] + b - c - pb } = { c/2 * p -pb + b - c} = { p (c/2 - b) + b - c }
It's important to note that c/2 - b is negative (follows from b > c > c/2. So the term p (c/2 - b) in the last formula above is negative.
(a) (i) if p < (b - c) / (b - c/2), then | p (c/2 - b) | < b - c, so the slope is positive. The graph of r(q) is line segment with positive slope, so it is maximized at the right-hand endpoint of domain, i.e., when q = 1. But that means A always cooperates.
(ii) if p > (b - c) / (b - c/2), then | p (c/2 - b) | > b - c, so the slope is negative. (Remember that p (c/2 - b) is negative.) In this case the graph of r(q) is a line segment with negative slope and is maximized at the left-hand endpoint of domain, i.e., when q =0. But that means A always defects.
(b) In the case that p=q, we substitute p for q:
r(p) = { p (c/2 - b) + b - c }p + pb = { p (c/2 - b) + b - c + b } p. Now notice that the part in the curly brackets is equal to (b - c/2)(2 - p), so r(p) = (b - c/2)(2 - p)p
Using the product rule, r'(p) = (b - c/2) (-1)p + (b - c/2)(2-p)1 = (b - c/2)(1-p). If b > c/2, then r(p) is increasing on [0,1) and is therefore maximized when p = 1.
(c) If b < c/2, then r'(p) is negative on [0, 1) and so r(p) is decreasing. In this case r is maximized when p = 0. The reason for different outcomes boils down to increasing versus decreasing.