Asked by
Misael Peguero
on Dec 12, 2024
Verified
The prisoners' dilemma is used to illustrate the basic idea that
A) oligopolistic firms would be better off if they collude, but each has an incentive to cheat on the collusive agreement.
B) oligopolistic firms are always worse off when they collude.
C) oligopolistic firms never have an incentive to cheat on collusive agreements, unlike prisoners.
D) students who cheat on economics exams end up in jail.
Prisoners' Dilemma
A scenario in game theory showing why two rational individuals might not cooperate even if it's in their best interest to do so.
Collusive Agreement
An arrangement among competing firms to coordinate actions or fix prices, often in secret, to limit competition.
- Absorb the foundational ideas and complications linked to collusion activities among entities in oligopolies.
Verified Answer
CP
Learning Objectives
- Absorb the foundational ideas and complications linked to collusion activities among entities in oligopolies.
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