Explain the prisoner's dilemma case in game theory and its relevance to the maximin criterion
The scenario is of two burglary suspects who are captured by the police and interrogated in separate rooms. Each suspect has two strategy options: to deny the charge or to confess. If both deny it, both go free, for the police have no strong evidence. But, if one confesses and the other does not, the silent prisoner can expect a very long prison term. The maximin solution, then, is for both to confess and receive the moderate sentence that this elicits. If they were permitted to act collusively, they both would end up with no prison terms.
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A small reduction in a country's growth rate is a concern to policy makers because
A) a small change can have large effects on per capita GDP over time. B) a reduction usually leads to future reductions until finally the economy stagnates. C) policy makers focus too much on economic growth and not enough on increasing savings rates. D) the larger GDP is the better the economic welfare will be in the future.
Tariffs tend to reduce the volume of imports by
A. Setting maximum allowable import limits. B. Making them more expensive to domestic consumers. C. Placing severe quality restrictions on imported goods. D. Reducing prices of domestically produced goods.
Why does a newspaper dispenser open to a stack of newspapers and essentially “trusts” a consumer to take just one copy whereas a soft drink vending machine does not “trust” consumers and dispenses one can for each purchase?
Please provide the best answer for the statement.
According to the classical view, if consumer demand slowed down,
A. Investment and government demand would increase, and the economy would return to its long-term growth trend. B. Wages would increase, and the economy would return to its long-term growth trend. C. Prices would increase, and the economy would return to its long-term growth trend. D. Prices would decrease, and the economy would return to its long-term growth trend.