Consider the two consultancy firms Fluffy Advice and Strategic Thinking Inc that provide strategic

advice on various matters to wealthy individuals. They both face a choice whether to charge 1000 or

5000 SEK per hour. Suppose the two firms play this pricing game forever afte

r and that their payoffs

are represented by the payoff matrix below (where "M" stands for million SEK). What is the highest

effective rate of return,

R, that is required to sustain collusion on high prices by grim trigger

strategies?

3. Consider the two consultancy rms Fluffy Advice and Strategic Thinking Inc that provide strategic advice on various matters to wealthy individuals. They both face a choice whether to charge 1000 or 5000 SEK per hour. Suppose the two rms play this pricing game forever after and that their payoffs are represented by the payoff matrix below (where \"M\" stands for million SEK). What is the highest effective rate of return, R, that is required to sustain collusion on high prices by grim trigger strategies? Strategic Thinking Inc 5000 1000 Fluffy 5000 1 M, 1 M 0.25 M, 2 M Advice 1000 2 M, 0.25 M 0.5 M, 0.5 M