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American Airlines and United Airlines compete for customers on flights between Chicago and Los Angeles. The table below is the profit matrix for the airlines'
American Airlines and United Airlines compete for customers on flights between Chicago and Los Angeles. The table below is the profit matrix for the airlines' static, one-period prisoners' dilemma game in which each firm's only possible actions are to produce a large output (fly 64 thousand passengers per quarter) or a small output (fly 48 thousand passengers per quarter (Note: Quantities are in thousands of passengers per quarter; (rounded) profits are in millions of dollars per quarter.) mm '1; = '15 = 43 4.1 3.8 4:; = M W 4.1 5.1 mm.- s.1 4.6 q: = 48 3.8 4.6 Could American Airlines incentivize United to cooperate using a grim strategy? 0 yes, but only if they are playing the game in 3 rounds or more. 0 No 0 yes, but only if they are playing the game in a finite number of rounds. 0 yes, but only if they are playing the game indefinitely
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