AP MicroeconomicsGame Theory & Information
Grim Trigger Strategy
A grim trigger strategy cooperates until the opponent defects even once, then punishes by defecting forever after.
It is the harshest trigger strategy in a repeated game: a single defection triggers permanent retaliation. If players value the future enough (a high discount factor), the threat of eternal punishment makes cooperation a subgame-perfect equilibrium. Economists use it to explain how cartels sustain collusion without legal enforcement, since cheating once destroys all future cooperative profits.