2 Player 3x3 Grid Questions
David Ronayne
22 November 2012
Ok guys, here is a game:
Player 2
Player 1
U
M
D
L
5,5
0,0
6,0
C
0,0
3,3
0,0
R
0,6
0,0
1,1
(i) Find all the NE of the stage game above
(ii) Now assume the game is repeated twice. Both players have a common discount factor of
δ ∈ [0, 1]. Find a SPNE and the constraint on δ that supports it, where (5,5) occurs in the
first period.
(iii) Now find a second SPNE - that’s right, there’s more - and the constraint on δ that
supports it, where (5,5) occurs in the first period.
(iv) Which of the SPNE that you found has the more easily satisfied condition for δ? WHY?
1