In a repeated game, the best option for a firm is to price competitively, regardless of what action the other firm takes.

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Quizplus · Accepted Answer

In a repeated game, the best option for a firm often involves considering the actions of the other firm and potentially using strategies like tit-for-tat, where the firm mirrors the other firm's previous action, rather than always pricing competitively. This allows for the possibility of sustaining cooperative outcomes, like maintaining higher prices, that can be more profitable than constant competitive pricing.

In a Repeated Game, the Best Option for a Firm