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(Table: Firms a and B I) the Payoffs Represent Profits

Question 52

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(Table: Firms A and B I) The payoffs represent profits measured in thousands of dollars. (Table: Firms A and B I)  The payoffs represent profits measured in thousands of dollars.   In this infinitely repeated game, Firm A and Firm B are both using grim trigger strategies; they agree to charge a high price in period one. If Firm A has a change of heart and decides not to charge a high price in period one, what is Firm A's expected payoff from cheating? Assume that d = 0.9. A)  $165,000 B)  $150,000 C)  $315,000 D)  $180,000 In this infinitely repeated game, Firm A and Firm B are both using grim trigger strategies; they agree to charge a high price in period one. If Firm A has a change of heart and decides not to charge a high price in period one, what is Firm A's expected payoff from cheating? Assume that d = 0.9.


A) $165,000
B) $150,000
C) $315,000
D) $180,000

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