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Game theory economics Question 4 Consider the stage game depicted in the table below. Player 2 Red Blue Player 1 Red (5, 6) (-2, 8)

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Game theory economics

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Question 4 Consider the stage game depicted in the table below. Player 2 Red Blue Player 1 Red (5, 6) (-2, 8) Blue (8, -3 (0, 0) a) (6 points) Suppose that the stage game is repeated twice and players have perfect information. Find all subgame perfect Nash equilibria. b) (4 points) Now suppose that the stage game is repeated infinitely many times and players have perfect information. Define a grim trigger strategy for both players. c) (15 points) Find the minimum o value that can support the strategy you wrote in part b as a subgame perfect Nash equilibrium

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