Suppose you think that even if the game is played only once it will end with both firms playing S1 and earning payoffs of 10.

   Suppose you are Firm 1 and Firm 2 says, "If we both play our dominant strategies we'll earn profits of 7, but if we both play S1 we can earn profits of 10."

   There are only two possibilities. Either Firm 2 can or can't be trusted. It doesn't matter which is true. Your profit will be higher either way if you play S2. If you care about things other than profit then you aren't really playing the game shown to the left and we should alter the payoff matrix to reflect this.

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