Suppose that the stage game below is infinitely repeated and the players have a common discount factor 8. Using grim trigger/Nash reversion strategies, for what values of 8 can'(C, C) each period be implemented as a subgame perfect equilibrium? 2 C D C 3,3 -2,9 D 9,-2 1, 1 1

Suppose that the stage game below is infinitely repeated and the players have a common discount factor 8. Using grim trigger/Nash reversion strategies, for what values of 8 can'(C, C) each period be implemented as a subgame perfect equilibrium? 2 C D C 3,3 -2,9 D 9,-2 1, 1 1

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.6P

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Question

Suppose that the stage game below is infinitely repeated and the players have a common
discount factor 8. Using grim trigger/Nash reversion strategies, for what values of 8 can'(C, C)
each period be implemented as a subgame perfect equilibrium?
2
C
D
C 3,3
-2,9
D 9,-2
1, 1
1

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