Credible Promises and Hostage Mechanisms Can Support a Continuous Stream

question 4

Multiple Choice

Credible promises and hostage mechanisms can support a continuous stream of cooperative exchanges except when

• A) the promisor is better off fulfilling than ignoring his promise
• B) neither party has a prior dominant strategy
• C) the hostage can be revoked for just causes
• D) the hostage is more valuable than any given exchange
• E) the hostage is difficult to replace

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Definitions:

Oral Contract

An agreement between parties that is spoken, not written, but is still legally binding.

Milkshake Mixer

A kitchen appliance designed specifically for blending and mixing milkshake ingredients to create a smooth, evenly mixed beverage.

Enforceable

Capable of being imposed or compelled by legal means or authority.

Oral Contract

An agreement between parties spoken out loud and not written down, yet it is legally binding.