Russia and Qatar made the first serious moves in October 2008 toward forming an OPEC-style cartel for 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, the dominant strategy for each country is to cheat, as cheating provides a higher payoff regardless of the other country's decision.

Russia and Qatar Made the First Serious Moves in October