Question

If a Prisoner's Dilemma game is repeated daily, such that two rival stores choose a price...

If a Prisoner's Dilemma game is repeated daily, such that two rival stores choose a price simultaneously each morning for an extended number of days, which outcome can happen?
The Nash equilibrium will continue to be played only until one firm engages a trigger strategy against the other.
There will more likely be cooperation to achieve an outcome different from the Nash equilibrium that is better for both firms.
The Nash equilibrium will continue to be played throughout the game.
An outcome different from the Nash equilibrium would occur; however, only one firm will be better off.
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Answer #1

As this is an infinite game, they will not be playing on the Nash equilibrium because the game is a Prisoners dilemma and Nash equilibrium will hurt both the players, the answer is "B" There will more likely be cooperation to achieve an outcome different from the Nash equilibrium that is better for both firms.  

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