How Repeated Interaction Can Support CollusionA strategy of “tit for tat” involves playing cooperatively at first, then following the other player’s move. This rewards good behavior and punishes bad behavior. If the other player cheats, playing “tit for tat” will lead to only a short-term loss in comparison to playing “always cheat.” But if the other player plays “tit for tat,” also playing “tit for tat” leads to a long-term gain. So a firm that expects other firms to play “tit for tat” may well choose to do the same, leading to successful tacit collusion.