Economics 2129A/B Lecture Notes - Lecture 15: Trigger Strategy, Nash Equilibrium, Repeated Game
6 Apr 2016
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More realistic, you know the problem/game/decision will come up multiple times. A repeated game one in which the agents play the same static, normal form game repeatedly t times (where t may be infinite). The static one-shot game is referred to as the "stage game" because it is played over and over again at each "stage" of the repeated game. A sequential game is one in which players make decisions in sequence, so that some players will make decisions before or after others do. Any repeated game is also a sequential game, but not the inverse. The repeated game that arises if we repeat the one-shot 2-firm bertrand pricing game infinitely. T(cid:449)o fir(cid:373)s, a, b, (cid:449)ho i(cid:374) ea(cid:272)h period t = (cid:1004),(cid:1005),(cid:1006) simultaneously choose their own prices pt j where j = a, b. The possible strategies available to each firm in each period t are the set of all possible prices, as before.
