Y5

Question 1 Consider the following normal form stage game which reflects an infinitely repeated interaction between 2 players (1 and 2) deciding whether to cooperate or defect. Player 2 Cooperate Defect Cooperate 8 , 4 0 , 5 Player 1 Defect 10 , 0 2 , 1 (a) Define a Grim Trigger strategy for this game. (b) Show whether a grim trigger strategy constitutes a subgame perfect equilibrium, identi- fying the conditions on discount factors &; for i E {1, 2}. (c) What do we learn when comparing the results here to those in class when we considered a similar game with symmetric payoffs