In November 2005, six of Paris's most luxurious hotels-including George V, Le Bristol, the Ritz, and Hotel de Crillon-were fined for colluding on room rates.
Regular guests showed little concern-noting that, whatever the listed "rack rate," it was always possible to negotiate substantial discounts.
Using the "prisoners' dilemma" model, can you explain why the hotels were able to collude over their listed rates but not over discounts?