(Table: Lemonade) Andrei and Sonya Operate Lemonade Stands in the Same

question 43

Multiple Choice

(Table: Lemonade) Andrei and Sonya operate lemonade stands in the same neighborhood. Payoffs are in quarters . The kids have formed an agreement to restrict output. They are playing an infinitely repeated game in which output decisions must be made every period and both of them are using tit-for-tat trigger strategies. If the discount rate is d = 0.4, then the players ____.

• A) prefer to collude rather than not to collude
• B) prefer not to collude rather than to collude
• C) are indifferent between colluding and not colluding
• D) not enough information is given in the problem to determine preference for collusion.

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Definitions:

Systematic Desensitization

A behavioral therapy technique used to reduce fear, anxiety, or aversions through gradual exposure to the feared object or situation combined with relaxation exercises.

Progressive Relaxation

A technique for achieving a deep state of calm by tensing and then relaxing all the major muscle groups in sequence.

Exposure

The process of reducing fear or anxiety by gradually and repeatedly introducing the feared object or situation.

Aversion Therapy

A behavioral treatment method that uses negative stimuli to reduce the appeal of undesirable habits or behaviors.