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In November 2005, six of Paris's most luxurious hotelsincluding George V, Le Bristol, the Ritz, and Hotel de Crillonwere fined for colluding on room rates.
In November 2005, six of Paris's most luxurious hotelsincluding George V, Le Bristol, the Ritz, and Hotel de Crillonwere fined for colluding on room rates. Regular guests showed little concernnoting that, whatever the listed rack rate, it was always possible to negotiate substantial discounts. Using the prisoners' dilemma model, can you explain why the hotels were able to collude over their listed rates but not over discounts?
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