When duopoly games are repeated and a "tit for tat" strategy is used,
A) the competitive outcome is more likely to be reached than when the game is played once.
B) the monopoly outcome is more likely to be reached than when the game is played once.
C) both firms begin to incur economic losses.
D) one firm goes out of business.
E) because the game is repeated it is impossible to predict whether the competitive or the monopoly outcome is more likely.

Question

Quizplus · Accepted Answer

In repeated duopoly games where a "tit for tat" strategy is employed, firms are more likely to cooperate with each other to achieve mutual benefits, leading to outcomes that resemble those of a monopoly rather than competitive markets. This strategy encourages firms to match each other's cooperative or competitive actions in successive rounds, fostering an environment where mutual cooperation is rewarded, thus making a monopoly-like outcome more probable.

When Duopoly Games Are Repeated and a "Tit for Tat