ABSTRACT
One exception to the ad hoc explana tions is a game-theoretic interpretation offered by Alt, Calvert and H um es [1988]. They construct a finitely repeated game in which Saudi Arabia's punishm ent costs vary randomly from period to period, with the Saudis knowing their current punishment costs but not future punish ment costs. To them, the price collapse of 1985-86 should be interpreted as a random (and therefore unpredictable) effort by Saudi Arabia to reinforce its reputation as a low-cost producer and in the process discipline high-cost non-OPEC producers, such as Britain and Norway.