Though Nash games are noncooperative, a cooperative outcome is more likely if
A) long run gains are greater than short run gains.
B) firms can easily monitor the outcomes from rival's defection.
C) firms expect the market relationship to last only for a short time.
D) long run gains are smaller than short run gains.

Question

Quizplus · Accepted Answer

Cooperative outcomes are more likely if the long run gains are greater than short run gains. This is because in the long run, firms realize that cooperating can lead to mutually beneficial outcomes and sustainable market relationships, whereas short term gains may lead to a breakdown in cooperation and a "prisoner's dilemma" type situation where both firms end up worse off.

Though Nash Games Are Noncooperative, a Cooperative Outcome Is More