In a repeated game, deterring entry
A)is not possible.
B)is not a rational strategy if money is lost fighting the first potential entrant.
C)may require losing money fighting the first potential entrant.
D)cannot form a subgame perfect Nash equilibrium.

Question

Quizplus · Accepted Answer

Deterring entry in a repeated game is possible, but it may require losing money fighting the first potential entrant as a signal to deter future potential entrants. This is known as a "costly signal" and can be a rational strategy in the long run. Therefore, option C is the correct choice.

In a Repeated Game, Deterring Entry