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Consider the following game of chicken. Column Swerve Straight Row Swerve 2,2 1,3 Straight 3,1 0,0 Suppose that this stage game is repeated infinite number
Consider the following game of chicken. Column Swerve Straight Row Swerve 2,2 1,3 Straight 3,1 0,0 Suppose that this stage game is repeated infinite number of times. The payoff of each player from this repeated game is the discounted sum of his payoff from each stage game, with some discount factor <1. Consider the following strategy profile where both players are using "grim trigger" defined below. Grim trigger strategy: In period 1, Swerve. In period t, Swerve if no player played Straight in periods 1 through t1; Straight if any player (either the other player or himself or both) played Straight in at least one of the previous periods. Use the one-shot deviation principle to verify that this strategy profile is not a subgame perfect equilibrium for any discount factor
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