Figure 17-2

Figure 17-2. Two companies, Acme and Pinnacle, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.
-Refer to Figure 17-2. Acme and Pinnacle agree to cooperate so as to maximize total profit. If this game is played repeatedly and Acme uses a tit-for-tat strategy, it will choose a

A) good quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round.
B) poor quality product in the first round and in subsequent rounds it will choose whatever Pinnacle chose in the previous round.
C) good quality product in all rounds, regardless of the choice made by Pinnacle.
D) poor quality product in all rounds, regardless of the choice made by Pinnacle.

Correct Answer:

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