It is easier to sustain tacit collusion in an infinitely repeated game if:
A) the present value of cheating is higher.
B) there are more players in the game.
C) the interest rate is lower.
D) the present value of cheating is higher and the interest rate is lower.

Question

Quizplus · Accepted Answer

A lower interest rate means that future gains from cooperation are worth more in present terms, which incentivizes players to continue to collude. The number of players and the present value of cheating do not have a direct effect on the sustainability of tacit collusion in an infinitely repeated game.

It Is Easier to Sustain Tacit Collusion in an Infinitely