Refer to the normal-form game of price competition in the payoff matrix below. Suppose the game is infinitely repeated, and the interest rate is 10 percent. Both firms agree to charge a high price, provided no player has charged a low price in the past. If both firms stick to this agreement, then the present value of firm A's payoffs are:
A) 220.
B) 110.
C) 330.
D) 550.

Question

Refer to the normal-form game of price competition in the payoff matrix below.  Suppose the game is infinitely repeated, and the interest rate is 10 percent. Both firms agree to charge a high price, provided no player has charged a low price in the past. If both firms stick to this agreement, then the present value of firm A's payoffs are:
A) 220. 
B) 110. 
C) 330. 
D) 550.

Quizplus · Accepted Answer

The Answer of Refer to the normal-form game of price competition in the payoff matrix below.  Suppose the game is infinitely repeated, and the interest rate is 10 percent. Both firms agree to charge a high price, provided no player has charged a low price in the past. If both firms stick to this agreement, then the present value of firm A's payoffs are:
A) 220. 
B) 110. 
C) 330. 
D) 550.

Refer to the Normal-Form Game of Price Competition in the Payoff