Question
(a) For the following stage game, check whether the strategy profile given (below) is a subgame- perfect equilibrium of the game in which the
(a) For the following stage game, check whether the strategy profile given (below) is a subgame- perfect equilibrium of the game in which the stage game is repeated infinitely many times. The discount rate is = 0.9. Stage Game: Player 2 L M R T (3,1) (0,0) (-1,2) Player 1 M (0,0) (0,0) (0,0) B (-1,2) (0,0) (-1,2) Strategy profile: Until some player deviates, player 1 plays T and player 2 plays L. If anyone deviates, then each plays M thereafter.
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Industrial Organization Markets and Strategies
Authors: Paul Belleflamme, Martin Peitz
2nd edition
1107069971, 1107069978, 978-1107069978
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