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

Question

Quizplus · Accepted Answer

A cooperative outcome is more likely when firms expect the market relationship to last a long time. This is because the long-term gains from cooperation may outweigh the short-term gains from defection. Additionally, if firms expect to have ongoing interactions with each other, they may be more likely to build trust and establish a reputation for fair play, which can encourage cooperation.

Though Nash Games Are Noncooperative, a Cooperative Outcome Is More