For an infinitely repeated game promising A per period with continuing cooperation,B for the one period gain from cheating and C per period for the non-cooperative solution (B A C)will have a subgame perfect Nash equilibrium in trigger strategies providing
A)δ B/(A + C).
B)δ (B - A)/(B - C).
C)δ B/(A - C).
D)δ A/(B + C).

Question

For an infinitely repeated game promising A per period with continuing cooperation,B for the one period gain from cheating and C per period for the non-cooperative solution (B > A > C)will have a subgame perfect Nash equilibrium in trigger strategies providing
A)δ > B/(A + C).
B)δ > (B - A)/(B - C).
C)δ > B/(A - C).
D)δ > A/(B + C).

Quizplus · Accepted Answer

The condition for a subgame perfect Nash equilibrium in trigger strategies is that the present value of cooperating must be greater than the present value of cheating, which is represented by δ > (B - A)/(B - C).

For an Infinitely Repeated Game Promising a Per Period with Continuing