Table 17-7 Two Companies, Wonka and Gekko, Each Decide Whether to Produce

Table 17-7
Two companies, Wonka and Gekko, 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 (in millions of dollars) for the two companies.

-Refer to Table 17-7. Wonka and Gekko agree to cooperate so as to maximize total profit. If this game is played repeatedly and Wonka 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 Gekko chose in the previous round.
B) poor quality product in the first round and in subsequent rounds it will choose whatever Gekko chose in the previous round.
C) good quality product in all rounds, regardless of the choice made by Gekko.
D) poor quality product in all rounds, regardless of the choice made by Gekko.

Correct Answer:

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