In the repeated-game airline example, what happens if the game is played forever
ID: 1106541 • Letter: I
Question
In the repeated-game airline example, what happens if the game is played forever, but one or both firms care only about current profit? Assume that United Airlines (UA) and American Airlines (AA) are playing a two-firm, quantity-setting game Quantities are in thousands of passengers per quarter, profits are in millions of dollars per quarter. Suppose the game is played forever, but one or both of the airlines care only about current profit What is the Nash equilibrium in the first (or next) period of this game? A 64 QA48 8.2 7.6 A. This game does not have a Nash equilibrium O B. The Nash equilibrium is for American to produce q= 48 and United to produce q-64 ° C. The Nash equilibrium is for both airlines to produce q = 48 8.2 10.2 UA D. The Nash equilibrium is for both airlines to produce q-64 0 E. The Nash equilibrium is for American to produce q-64 and United to produce q-48 10.2 9.2 qu 48 7.6 9.2Explanation / Answer
It is a example of infinite repeated game.Output leads to cooperative behaviour.
Option will be C.
Both maximise the profit.