In a repeated prisoners\' dilemma decision, both managers can make credible thre

Question

In a repeated prisoners' dilemma decision, both managers can make credible threats to punish cheating because if either manager cheats, the other manager can increase its profit by also cheating. both of the cheating cells in the payoff table arc strategically stable cells. when both firms cheat, they both avoid the Nash equilibrium cell. both a and c.Price matching is a strategic move that seeks to make cheating unprofitable. must generally be announced publicly in order to have the desired effect. has no usefulness to managers if a simultaneous pricing decision is going to be made only one time. both a and b all of the above

Explanation / Answer

In a repeated prisoners' dilemma decision, both managers can make credible threats to punish cheating because if either manager cheats, the other manager can increase its profit by also cheating. The other reason is when both firms cheat, they both avoid the Nash equilibrium cell.

Price matching is a strategy move that seeks to make cheating unprofitable. It must generally be announced publicly in order to have the desired effect. It would have no usefulness to managers if a simultaneous pricing decision is going to be made only one time.

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