Cheap talk
A)is never credible.
B)is illegal.
C)generally affects the game's payoffs.
D)can be credible when both firms have an incentive to be truthful.

Question

Quizplus · Accepted Answer

Cheap talk can be credible when both firms have an incentive to be truthful. For example, in a situation where both firms benefit from cooperation, they may communicate their willingness to cooperate through cheap talk. However, in situations where the firms have conflicting interests, cheap talk is less credible and may affect the game's payoffs.

Cheap Talk