Firm A
A honors agreement	A cheats
Firm B	B honors agreement	B earns $8M	A earns $8M	B earns $2M	A earns $10M
B cheats	B earns $10M	A earns $2M	B earns $4M	A earns $4M

Given the concept of Nash Equilibrium, which of the following is the outcome in equilibrium?

a.

B cheats while A honors the agreement

b.

Both firms cheat

c.

Both firms honor the agreement

d.

A cheats while B honors agreement