In an oligopoly game,the incentive to cheat is reduced when:
A)it is a one-period game and there are only a few players.
B)the game is repeated a finite number of times and all players are aware of it.
C)it is a one-period game and the payoffs from cooperation are higher than the payoffs from cheating.
D)the game is repeated indefinitely and there is a threat of retaliation in subsequent periods.

Question

Quizplus · Accepted Answer

In an oligopoly game, the incentive to cheat is reduced when the game is repeated indefinitely and there is a threat of retaliation in subsequent periods. This is because if a player cheats in one round, it will impact their future profits as retaliation from other players is likely. Therefore, repeated games with the threat of retaliation are a strong deterrent against cheating.

In an Oligopoly Game,the Incentive to Cheat Is Reduced When