THE FORGIVING TRIGGER STRATEGY: AN ALTERNATIVE TO THE TRIGGER STRATEGY
Miguel Aramendia (),
L. Ruiz and
Federico Valenciano ()
Additional contact information
L. Ruiz: Economia Aplicada IV, Universidad del Pais Vasco, Avda. L. Aguirre 83, Bilbao 48015, Spain
International Game Theory Review (IGTR), 2004, vol. 06, issue 02, 247-264
The grim-trigger strategy introduced by Friedman is often used in economic models, mainly because of its simplicity, to show that collusion can be sustained by means of a subgame perfect equilibrium. In this work we show that, under simple conditions, it is possible to improve on the grim-trigger strategy while retaining subgame perfection and in some cases adding weak renegotiation proofness (in the sense of Farrell and Maskin). The basic idea is that, following a deviation, the cheater, instead of continuing in the Nash equilibrium forever, chooses an autopenalty which signals, in a very strong way, that he/she would not deviate any more if cooperation were reestablished. We check the nice working of this strategy in the Cournot's oligopoly model.
Keywords: Repeated games; trigger strategy; renegotiation proof (search for similar items in EconPapers)
JEL-codes: B4 C0 C6 C7 D5 D7 M2 (search for similar items in EconPapers)
References: View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
Access to full text is restricted to subscribers
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:wsi:igtrxx:v:06:y:2004:i:02:n:s0219198904000186
Ordering information: This journal article can be ordered from
Access Statistics for this article
International Game Theory Review (IGTR) is currently edited by David W K Yeung
More articles in International Game Theory Review (IGTR) from World Scientific Publishing Co. Pte. Ltd.
Bibliographic data for series maintained by Tai Tone Lim ().