Question 1 [10 marks] Two players repeatedly play the following simultaneous move game for T periods. Assume that both players observe all past actions and discount payoffs by 6 E [0, 1]. 1/2 c D l K A 5,5 -1,-2 B 6,-1 0,-3 (a) Find all subgame perfect equilibria of the game repeated for T = 1550 periods. (b) Assume now that T = 00, so that the stage game is played an infinite number of times. For what values of 8 does the following strategy profile, in which (A, C) is played along the equilibrium path at every date, constitute a subgame perfect equilibrium? The game is played in two states: The actual game play starts in State I and then it continues to evolve as follows. a In State 1, player 1 is supposed to choose action A and player 2 chooses C. If either player deviates from State I, play switches to State 11. o In State 11, player 1 is supposed to play B and player 2 should play D for a single period. if both players comply with these strategies, play reverts to State 1 in the next period. Otherwise, play continues in State II. [Players are stuck in State 11 until (B, D) is observed