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in Figure Consider the infinitely repeated version of the symmetric two-player stage game PR13.4. The first number in a cell is player l's single-period

  

in Figure Consider the infinitely repeated version of the symmetric two-player stage game PR13.4. The first number in a cell is player l's single-period payoff. Figure PR13.4 Player 2 y 2,7 1,4 1,3 5,6 a 1,1 2,2 0,4 3,3 3,2 4,3 3,1 8,0 d 4,0 3,1 5,1 2,3 Player 1 b Assume that past actions are common knowledge. Each player's payoff is the present value of the stream of single-period payoffs where the discount factor is 8, for player i. (a) Define a grim trigger strategy profile. (b) Derive conditions whereby the strategy profile in (a) is a subgame perfect Nash equilibrium.

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