Assume the following game is played one time only. Based on the information in the payoff matrix, PNC Bank and Citizens Bank are considering an implicit collusive agreement on interest rates. Payoffs to the two firms are represented in terms of profits in thousands of dollars:
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Citizens Bank
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Collude: Raise Rates
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Defect: Keep Rates where they are
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PNC
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Collude: Raise Rates
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(900, 600)
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(700, 800)
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Defect: Keep Rates where they are
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(1100, 300)
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(800,400)
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a. Does PNC have a dominant strategy? What is it? Does Citizens have a dominant strategy? What is it?
b. Does the result of your answer change if the game is played an infinite number of times? Why or why not. Properly use game theoretic terminology in your answer.