Game Theory Question 2

2. Two players are engaged in a infinitely repeated game whose stage game is shown below.

L R

U 5,5 1,2

D 6,2 2,4

a) Find all feasible individually rational payoffs.

b) Is payoff (5,5) possible in an SPE (assuming is sufficiently large)? Why?

c) Can you suggest a simple trigger strategy achieving payoff (5,5)? (Hint: find NE of

the stage game and recall the weak perfect folk theorem.)

d) What is the smallest value of making this simple trigger strategy possible?

Still stressed from student homework?
Get quality assistance from academic writers!