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

question 52

Multiple Choice

(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

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