Avoiding a 'death run' depends on the ability to trust other firms: with low trust every equilibrium races to ruin, while with high trust the probability that two rational firms race forever vanishes.
The paper's key conclusion is that the level of trust between firms dictates the outcome: low trust guarantees racing to ruin, while high trust makes indefinite racing virtually impossible.
transcript
Jack Clark: With low trust, every equilibrium races to ruin: the disaster arrives with probability one. With intermediate trust, immediate stopping and racing to ruin are both equilibria. With high trust, in every equilibrium, the probability that two rational firms race forever vanishes quadratically in the prior odds ratio of rationality.
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