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Consider the following payoff matrix: D E F A 0,0 1,-1 2,-2 B -1,1 6,4 0,5 C -2,2 1,2 3,3 This is the payoff matrix for a simultaneous move stage...
This is the payoff matrix for a simultaneous move stage game. We consider a repeated game in which this stage game is repeated two times and utility is valued equally in each period by both players (i.e. δ1 = δ2 = 1). In this stage game, there are two pure strategy Nash Equilibria: A, D is one and C, F is the other. The following set of strategies is an SPNE to the repeated game:Player 1 : choose C in both periods regardless of what has happened in the pastPlayer 2 : choose F in both periods regardless of what has happened in the pastIs there a pure strategy SPNE to the repeated game (repeated twice) in which both players are strictly better off than they are playing the previous strategies? If so, what are the strategies in this SPNE that is better?
