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question below please answer Consider an innitely repeated game with discounting 6 e (0, 1) with the following stage game. (a) Construct a SPE in

question below please answer

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Consider an innitely repeated game with discounting 6 e (0, 1) with the following stage game. (a) Construct a SPE in which (U, L) is played in every period on the equilibrium path. Describe the strategies and state any necessary conditions on 6. (10 POINTS) (b) Now suppose 6 = 0.7. Construct a SPE in which (U, L) is played in every period on the equilibrium path. Describe the strategy prole and show that it is a SPE (i.e. that players do not wish to deviate). (20 POINTS) HINT: Construct a punishment for player 1 that is more severe than grim trigger Nash reversion. Make sure to specify what happens if someone deviates during the punishment. Check deviations at every class of history

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