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The following extensive form game (i.e., tree) represents the sequence of decisions and possible outcomesfor two firms in a cartel, Firm A and Firm B.

The following extensive form game (i.e., tree) represents the sequence of decisions and possible outcomesfor two firms in a cartel, Firm A and Firm B. Both firms can either decide to cooperate on a price fixing arrangement or cheat on a price fixing arrangement.Each potential combination of decisions presents the payoffs to these two firms. The first number represents Firm A's payoff and the second number is Firm B's.

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Cooperate 400, 400 Cooperate Cheat 300, 500 Firm A Firm B Cooperate Cheat 500, 300 Cheat 200, 200

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