When a prisoners' dilemma game is repeated a finite number of times (T),
A)cooperation unravels during the first round of the game, resulting in the static game Nash equilibrium.
B)cooperation continues until the T-2 round, where the players will switch to a non-cooperative Nash equilibrium.
C)firms cooperate and achieve the collusive Nash equilibrium for all rounds.
D)None of the above.

Question

Quizplus · Accepted Answer

In a finitely repeated prisoners' dilemma, rational players foresee the end of cooperation and default to the non-cooperative Nash equilibrium from the first round, as they anticipate the unraveling of cooperation in the final round and adjust their strategies accordingly from the start.

When a Prisoners' Dilemma Game Is Repeated a Finite Number