Consider an infinitely repeated game where the stage game is the game of chicken: Swerve Straight Swerve 0,0 -1,1 Straight 1, -1 -10, -10 Assume that the discount factor is very close to one. For concreteness, you can assume that d = 0.99.

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Equilibrium Price and Quantity

Equilibrium refers to a state of balance that comes about because there is equality in all forces.