Russia and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel on natural gas. The two strategies these countries face are to comply with the cartel agreement or to cheat on the cartel agreement. If both countries comply, the economic profit for each will be $140 million. If one country cheats, that country earns $200 million in economic profit and the other country will have an economic loss of $10 million. If all countries cheat, they break even. What is the outcome of this game if it is only played once?

Question

Quizplus · Accepted Answer

In a one-time game, both countries have an incentive to cheat to maximize their own profit, leading to a situation where both cheat and break even.

Russia and Qatar Made the First Serious Moves in October