The market for bagels contains two firms: BagelWorld (BW)and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars)depends on whether they abide by the agreement or cheat on the agreement.
Suppose the game above is repeated every day, and both firms adopt the following strategy: cooperate on the first day, then if the other firm cheats, cheat the next day, and if the other firm abides, abide the next day. This type of strategy is likely to increase the probability that:

Question

The market for bagels contains two firms: BagelWorld (BW)and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars)depends on whether they abide by the agreement or cheat on the agreement.  
 Suppose the game above is repeated every day, and both firms adopt the following strategy: cooperate on the first day, then if the other firm cheats, cheat the next day, and if the other firm abides, abide the next day. This type of strategy is likely to increase the probability that:

Quizplus · Accepted Answer

In the tit-for-tat strategy, each player mimics the last player's move. This strategy has been shown to reduce cheating in prisoner's dilemma games.

The Market for Bagels Contains Two Firms: BagelWorld (BW)and Bagels'R'Us