Suppose that Bill and Ted use a tit-for-tat scheme to encourage cartel pricing and Bill chooses the low price for a single month. Bill and Ted will deviate from cartel pricing for two months.

Question

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In a tit-for-tat scheme, if Bill chooses the low price for a single month, Ted would respond by choosing the low price in the next month as retaliation. After that, if Bill returns to cartel pricing, Ted would follow in the subsequent month, leading to a deviation from cartel pricing for only one month each, not two months.

Suppose That Bill and Ted Use a Tit-For-Tat Scheme to Encourage