In a finitely repeated prisoners' dilemma game,
A)firms will only cooperate if they each adopt a tit-for-tat strategy.
B)firms cooperate and achieve the collusive Nash equilibrium for all rounds.
C)firms cooperate for most of the rounds, but switch to the non-cooperative outcome in the final couple of rounds.
D)firms do not cooperate and the static game Nash equilibrium is the outcome for each round.

Question

Quizplus · Accepted Answer

In a finitely repeated prisoners' dilemma, backward induction leads firms to not cooperate in any round, as they anticipate defection in the final round and thus defect from the start.

In a Finitely Repeated Prisoners' Dilemma Game