I would guess, it is simply wrong to assume, market actors would engage in first order thinking only. Of course they will frequently see mutual understandings a

I would guess, it is simply wrong to assume, market actors would engage in first order thinking only. Of course they will frequently see mutual understandings as the best course of action and take obvious psychological dynamics into account? Here, they see "justified by circumstances"-acceptance of price hikes and act accordingly. Holding back on such a price hike would actually hurt your bottom line, as people do not switch brands so easily in real life.