If Germany can make compact cars more efficiently than Russia, it enjoys

A gaming strategy in which one player states that he/she would break the agreement for eternity if his/her co-player breaks the agreement once is called:

a. a grim trigger. b. a credible threat. c. a chain-store paradox. d. a dominance pull.

Assume that in a price-fixing game, if Player A breaks the agreement in the first year, she earns $11 while Player B earns $5 . However, if Player A breaks the agreement once, Player B decides to break the agreement for eternity, leaving each to receive $8 per year for the rest of their lives. If they both keep the agreement each receives $9 per year for the rest of their lives. If the discount

rate is 30 percent per period: a. Player A will prefer to break the agreement in the first year. b. Player A will prefer to break the agreement in the second year. c. Player A will prefer to keep the agreement throughout her life. d. Player A will prefer to keep the agreement only for the first five years.