What is the main idea of the passage?

Repeated interaction can make cooperation more sustainable because present choices affect reputation and future responses, though trust is not guaranteed. (The passage contrasts one-time incentives with repeated reputation, legal boundaries, and conditions that can support or weaken trust.)

Why can a surprise discount become costly later?

The rival may respond with continued discounts, reducing both shops' future returns. (The third paragraph turns the short-term gain into a signal that can trigger weeks of matching behavior.)

What does “credible” mean in the third paragraph?

believable because past behavior supports the promise (A record of keeping promises gives the other owner evidence that future cooperation may continue.)

Which lawful shared activity is suggested?

street cleaning (The fourth paragraph names recycling, street cleaning, and opening-hour information as possible cooperative activities.)

Two Shops Choose Whether to Cooperate: Level 4 Reading Comprehension Questions

Two food shops face the same square. Each can keep a steady price or announce a deep one-day discount. A discount attracts customers if the other shop holds steady. If both discount, neither gains much traffic and both earn less. If neither discounts, both receive predictable returns.

In a one-time encounter, each owner may reason that discounting protects against either choice by the rival. The result can leave both worse off. This resembles a prisoner's dilemma: individual incentives can conflict with a jointly better outcome.

The shops, however, meet again daily. Repetition changes what today's choice communicates about tomorrow. An owner who gains briefly through a surprise discount may trigger matching discounts for weeks. A shop that keeps a promise can build a reputation that makes future cooperation more credible.

Cooperation here does not mean the owners should make illegal price agreements. They might cooperate on recycling, street cleaning, or opening-hour information while setting prices independently. The game describes incentives; actual rules define allowed actions. Repeated interaction does not guarantee trust. A shop may close, misread a competitor, or value today's gain far more than later returns. Clear public rules, reliable information, and possible future response can nevertheless support cooperation. One decision becomes both an outcome today and a signal about tomorrow's relationship.

Comprehension questions