Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?
What will be an ideal response?
The prisoners' dilemma describes noncooperative behavior, but in reality most businesses engage in repeat transactions so that cooperation is likely to occur. One cooperative strategy is tit-for-tat behavior.
You might also like to view...
If Bill is willing to pay $10 for one good X, $8 for a second, and $6 for a third, and the market price is $5, then Max's consumer surplus is:
a. $24 b. $18. c. $9 d. $6.
The U.S. legal system mainly engages in activities that
A. involve defining and protecting property rights. B. focus on producing public goods. C. are dedicated to producing private goods. D. focus on income redistribution.
Based on the figure below. Starting from long-run equilibrium at point C, a favorable inflation shock that decreases inflation from ? to ?1 will lead to a short-run equilibrium at point ________ and eventually to a long-run equilibrium at point ________, if left to self-correcting tendencies. 
A. A; C B. B; A C. B; C D. A; B
The interest parity condition can be written as
A) R = R - (Ee - E)/E. B) R = R + (Ee - E)/E. C) R = R2 - (Ee - E)/E. D) R = R /(Ee - E). E) R = R + (Ee + E)/E.