Playing the equilibrium of a one-stage game over and over again when the one-stage game is repeated is
A) Always a Nash equilibrium
B) Only a Nash equilibrium if the game is finite
C) Only a Nash equilibrium if the game is infinite
D) Dominated in some cases

Question

Quizplus · Accepted Answer

Playing the equilibrium of a one-stage game over and over again when the one-stage game is repeated is often referred to as a "grim trigger" strategy. This strategy is a Nash equilibrium when players are rational and they believe that their opponents are rational as well. In this case, each player has an incentive to continue playing the equilibrium strategy because deviating from it would lead to a worse outcome. Therefore, the answer is A) Always a Nash equilibrium.

Playing the Equilibrium of a One-Stage Game Over and Over