When a firm responds to a rival's cheating by cheating and to a rival's cooperation by cooperating,that firm is practicing a _____ strategy.
A)dominant
B)trigger
C)conclusive
D)tit-for-tat

Question

Quizplus · Accepted Answer

The tit-for-tat strategy is a retaliatory approach in which a firm responds to a rival's action by replicating that action. This means that if a rival cheats, the firm will cheat in response, and if the rival cooperates, the firm will cooperate in response. This strategy is effective because it maximizes payoffs for both firms in the long run, since it incentivizes cooperation and minimizes the impact of cheating. Therefore, the best choice is D) tit-for-tat.

When a Firm Responds to a Rival's Cheating by Cheating