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Consider a scenario where two firms can either advertise or not advertise, and the payoffs are such that it is a 'prisoners dilemma' type

 

Consider a scenario where two firms can either advertise or not advertise, and the payoffs are such that it is a 'prisoners dilemma' type situation. The Nash Equilibrium of the one-off simultaneous- move game is that they both advertise, even though they could both be better off if neither advertised. Is the outcome of this game likely to be impacted by cheap talk? What about repetition of the game? Explain.

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