Suppose that firm A and firm B enter into a collusive agreement. Suppose firm A violate the agreement, which results in firm B deciding never again to cooperate with firm A. This is an example of a:
A) Strictly dominant strategy.
B) Trigger strategy.
C) Cheating rule.
D) Backward iteration.
E) Focal-point strategy.

Question

Quizplus · Accepted Answer

A trigger strategy is a type of strategy in game theory where a player cooperates until the other player defects (violates the agreement), after which the strategy triggers non-cooperation indefinitely. In this scenario, firm B decides never again to cooperate with firm A after firm A violates the collusive agreement, which is a classic example of a trigger strategy.

Suppose That Firm a and Firm B Enter into a Collusive