Question

L8.A strategy of tit for tat: involoves playing cooperatively at first, then following the other player's move b rewards good behavior and punishes bad behavior c) can lead to a successful tacit collusion if all firms choose this same strategy d) All of the above

Answer 1

Question 18

Tit-for-tat strategy is a game theory strategy that is based on assumption that each player takes cue from the action of player choosing strategy before it.

So, if first player chooses strategy A then under Tit-for-tat strategy framework second player will also choose strategy A.

So, cooperation meets with cooperation and defect meets with defect.

Thus,

A strategy of tit-for-tat involves playing cooperatively at first, then following the other player's move. It rewards good behavior and punishes bad behavior. It can also promote tacit collusion in successful manner if all parties bind by collusive strategy.

Hence, the correct answer is the option (d) [All of the above].