In repeated negotiations between two firms:
A) the bargaining behavior of the firms is motivated solely by the immediate profit available from an agreement.
B) the reputation of a firm does not play a significant role.
C) there is enhanced scope for purely opportunistic behavior by firms.
D) The firm with less bargaining power is positioned to receive a greater share of the profit.
E) firms have extra incentives to maintain a cooperative relationship.

Question

Quizplus · Accepted Answer

In repeated negotiations, firms have extra incentives to maintain a cooperative relationship as it enhances the chances of reaching mutually beneficial agreements in the future. This encourages both firms to act in a trustworthy and reliable manner, which can strengthen their reputation and lead to better outcomes in future negotiations.

In Repeated Negotiations Between Two Firms