Trigger strategy explained

In game theory, a trigger strategy is any of a class of strategies employed in a repeated non-cooperative game. A player using a trigger strategy initially cooperates but punishes the opponent if a certain level of defection (i.e., the trigger) is observed.

The level of punishment and the sensitivity of the trigger vary with different trigger strategies.

Trigger strategies

• Grim trigger (the punishment continues indefinitely after the other player defects just once)
• Tit for tat (the punishment continues as long as the other player defects)
• Tit for two tats (a more forgiving variant of tit for tat)

References

Textbooks and general reference texts

• Vives, X. (1999) Oligopoly pricing, MIT Press, Cambridge MA (readable; suitable for advanced undergraduates.)
• Tirole, J. (1988) The Theory of Industrial Organization, MIT Press, Cambridge MA (An organized introduction to industrial organization)

Classical paper on this subject

• Friedman, J. (1971). A non-cooperative equilibrium for supergames, Review of Economic Studies 38, 1 - 12. (The first formal proof of the Folk theorem (game theory)).