Subgame perfect reaction function equilibria in discounted duopoly supergames are trivial (Q1084031)

This paper is concerned with infinitely repeated duopoly games with discounting. A question which has been open since \textit{J. W. Friedman's} reaction function article [Rev. Econ. Stud. 35, 257-272 (1968; Zbl 0224.90016)] is settled for a general class of games. The question is whether nontrivial reaction function equilibria can be subgame perfect. This question is answered in the negative. Such equilibria must be trivial in the sense of prescribing the stage game noncooperative equilibrium actions in every period, independent of prior history.