In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most...

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In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most...

In the “prisoner’s dilemma” duopoly game, if each firm chooses the price level that is most profitable no matter what the other company does, then

a. the companies can end up colluding, pricing high to keep profits up.

b. the companies end up pricing low, leading to very low profits.

c. one company can gain large profits while the other suffers from low profits.

d. There is no clear result.

e. None of the above is correct.

business economics

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Answer 1

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b. the companies end up pricing low, leading to very low profits.

In a prisoer's dillemma if both players choose the most profitable strategy irrespective of ehat the other player chooses, this leads to a overall loss which hurts both players.

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