ECON 101 Lecture Notes - Lecture 4: The Roots, Problem Set, Extensive-Form Game
Document Summary
1 lesson outline: time discounting, finitely repeated games, in nitely repeated games, trigger strategies. So far we have studied only one-shot games; that is, games which are played only once. In reality, the same games are often played repeatedly over multiple time periods. For example, when rms engage in price competition, they do not simply set their prices once and leave it at that. Instead, they play the same price-setting game over and over again with each other, every day or year, for as long as they are competing. A game that is played repeatedly over many periods is known as a repeated game. In this lecture, we will see that when games are played repeatedly, some interesting new strategic possibilities emerge. In particular, we will see that when games are played repeatedly, it becomes possible for the players to punish each other for undesirable actions.
