Grim Trigger Strategy
Dictionary Glossary of game theory terms.
Deviation could be in form of breaking rules, cheating etc. If someone has defected, then you defect forever. Why is it not a sub-game perfect equilibrium? And once again we have to be careful, because the temptation occurs today and this difference between values occurs tomorrow. Clearly there are opportunities here, in each period, for us to cheat.
Grim Trigger Strategy Becker Friedman Institute
If Jake is the only cheat then we both defect for one period and go back to cooperation. All-pay auction Alpha—beta pruning Bertrand paradox Bounded rationality Combinatorial game theory Confrontation analysis Coopetition List of game theorists List of games in game theory No-win situation Topological game Tragedy of the commons Tyranny of small decisions.
Under the grim trigger in international relations perspective, a nation cooperates only if its partner has never been exploited in the past. Repeated Interaction: So Jake has a very good deviation there which is simply to cheat forever.
Let me just turn my own page. Email required Address never made public. We considered my cheating today, but thereafter, I reversed it back to doing what I was supposed to do: Retrieved I do not believe it. We know that sub-game perfect equilibria have the property that they have Nash behavior in every sub-game, so in particular in the last period of the game and so on.
Specifically suppose I have a business relationship, an ongoing business relationship with Jake. That seems a little bit drastic. One more line: Why am I going along with that?
Because in particular, if Jake is smart and he is , Jake will look at this equilibrium and say: So remember the value of 2 forever was what? All-pay auction Alpha—beta pruning Bertrand paradox Bounded rationality Combinatorial game theory Confrontation analysis Coopetition First-move advantage in chess Game mechanics Glossary of game theory List of game theorists List of games in game theory No-win situation Solving chess Topological game Tragedy of the commons Tyranny of small decisions.
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Most econometric models of intrahousehold behavior assume that household decision making is efficient, i. The going wage is 1 but you can set a different wage or you could just not invest. So this is the value of 1 for ever, or at least until the end of the world.
We need this to be less than the value of continuing the relationship. If you do invest in Freedonia and set a wage of W, then your agent has a choice. Since a single defect by the opponent triggers defection forever, grim trigger is the most strictly unforgiving of strategies in an iterated game.
Just an example of using repeated games.