If you advertise and your rival advertises, you each will earn $5 million in pro

Question

If you advertise and your rival advertises, you each will earn $5 million in profits. If neither of you advertises, you will each earn $10 million in profits. However, if one of you advertises and the other does not, the firm that advertises will earn $15 million and the non-advertising firm will earn $1 million. Suppose this game is repeated for a finite number of times, but the players do not know the exact date at which the game will end. The players can earn collusive profits as a Nash equilibrium to the repeated play of the game if the probability the game terminates in any period is:

A

1.

B

greater than 1.

C

close to zero.

D

None of the answers is correct.

A

1.

B

greater than 1.

C

close to zero.

D

None of the answers is correct.

Explanation / Answer

C

close to zero.

C

close to zero.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.