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

Question

Quizplus · Accepted Answer

When the long-run gains are greater than the short-run gains, it incentivizes firms to act cooperatively to achieve those long-run gains. This is because they recognize that the benefits of cooperation will outweigh any short-term gains they may get from defecting in the short run. Therefore, a cooperative outcome is more likely in this scenario, even in a non-cooperative Nash game.

Though Nash Games Are Noncooperative,a Cooperative Outcome Is More Likely