Suppose you are Coca-Cola and you are competing with Pepsi-Cola. Both of you would make more money if you advertised less - but you find yourself in a repeated prisoner's dilemma where you both are deciding to advertise. How would you prefer to deal with your competitor?
Be nice and don't advertise first.
If your competitor advertises do not escalate the situation, but do match their move
Wait to respond to your competitors actions.
Make sure your actions are clear to your competitor.