It would be more difficult to establish a collusive agreement for this game that for the previous game. The one period payoff to successfully cheating is to double profits. This might well be too tempting to resist no matter what you believe the other firm would do in retaliation. (The higher the interest rate is the more tempting it is to give up future profits for current profits, so cheating is more likely when interest rates are higher since future money is less valuable.)

   This payoff matrix also suggests another form of collusion which, though more complicated, might be very tempting.

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