If Firm a and Firm B Are Playing a Finitely

question 31

Multiple Choice

If Firm A and Firm B are playing a finitely repeated game and both know when the final period is, cooperation________ _ possible due to the________ .

• A)is; trigger strategy
• B)is not; end- period problem
• C)is not; trigger strategy
• D)is; end- period problem

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Definitions:

Rational Self-Interest

The principle that individuals tend to make decisions that maximize their own utility or benefit.

Collude

To conspire or work together secretly, especially in order to cheat or deceive others.

Dutch Auction

A type of auction where the auctioneer starts with a high asking price which is lowered until some participant is willing to accept the auctioneer’s price, or a predetermined minimum price is reached.

Sealed-Bid Auction

A type of auction where all bidders simultaneously submit sealed bids without knowing the bids of other participants.