finitely repeated game real life example

Sometimes, players threaten a grim-trigger strategy and don't follow through with it. While tit-for-tat leaves room for forgiveness, grim trigger strategy is an endless cycle of defection. For instance, if Senator 1 cooperates on a bill sponsored by Senator 2, but Senator 2 doesn't reciprocate the cooperation, Senator 1 might refuse to cooperate when Senator 2 proposes his or her next bill: tit-for-tat.Īnother trigger strategy is the grim trigger strategy, in which Player 1 cooperates until Player 2 defects, causing Player 1 to defect on every move thereafter regardless of future cooperation on the part of Player 2. The players match defection in kind with their own defection for a predetermined number of moves, before attempting to re-establish trust. Playing a series of games with no known end, the players can adopt a tit-for-tat strategy, which punishes the opponent for defecting. This is the only chance for either player to do so, lest both immediately fall to a disadvantage, never to recover the lead. But since both players know that will be the optimal strategy, they'll each play their most self-serving strategy the move before that, and so on, until they're pre-empting the other on the very first game in the series.

Knowing this, both players realize they must defect on the second-to-last move. In fact, even if you repeat the game, but still know exactly how many games there will be, both players will both expect the other to maximize utility by defecting on the very last move, or the last game in the series.

Finitely repeated game real life example