Problem Set 6

GV225

Question 1. SPNE of finitely repeated Prisoner’s Dilemma (426.1 from Osborne)

Show that a finitely repeated Prisoner’s Dilemma has a unique SPNE in which each player’s strategy chooses D in every

period, regardless of the history.

Question 2. Grim trigger strategies in a general Prisoner’s Dilemma (429.1 from Os-

borne)

Find the condition on the discount factor under which the strategy pair in which each player uses the grim trigger

strategy is a NE of the infinitely repeated game of the Prisoner’s Dilemma in Figure 429.1.