The market for bagels contains two firms: BagelWorld (BW) and Bagels'R'Us (BRU). The owners of the two firms decide to fix the price of bagels. The table below shows how each firm's profit (in dollars) depends on whether they abide by the agreement or cheat on the agreement. 
Is this game a prisoner's dilemma?
A. Yes, because if both firms played their dominant strategy, they each would earn a higher payoff than when they both play their dominated strategy.
B. Yes, because if both firms played their dominated strategy, they each would earn a higher payoff than when they both play their dominant strategy.
C. No, because cheating yields the highest payoff for both firms
D. No, because neither firm has a dominant strategy
Answer: B
You might also like to view...
The "Got Milk?" advertising campaign is a good example of
A) advertising in a competitive market. B) how advertising in a competitive market does not pay off for a single firm. C) interest groups financed by the industry advertise for the whole industry. D) All of the above.
The spot exchange market is for ________ delivery, whereas a forward contract permits a firm to buy or sell currency for ________ delivery
A) future; immediate B) local; distant C) immediate; future D) long-term; short-term
Federal individual income taxes illustrate the ability-to-pay principle of taxation
a. True b. False
Read the following passage and then answer the question below.
The term “bounded rationality” describes a more realistic conception of human problem-solving ability. People might satisfice in some circumstances rather than trying to accurately calculate the best decision. Judging from context, what is the best definition for satisfice? a. to sacrifice present satisfaction for the promise of greater satisfaction in the future b. to forgo maximizing utility in one situation in order to maximize utility in another c. to alter one’s experience of satisfaction in order to maximize the satisfaction offered by an available good d. to find the option that provides the minimum level of satisfaction required