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If You Advertise and Your Rival Advertises,you Each Will Earn

Question 116

Multiple Choice

If you advertise and your rival advertises,you each will earn $4 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 $1 million and the non-advertising firm will earn $5 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 profits of $10 each period as a Nash equilibrium to a repeated play of the game if the probability the game terminates at the end of any period is:


A) close to 1.
B) close to 0.
C) between 0 and 1.
D) All of the statements associated with this question are correct.

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