Question

Using the concept of game theory and the prisoner's dilemma, explain why it is better for...

Using the concept of game theory and the prisoner's dilemma, explain why it is better for oligopoly firms to work together than compete with each other. How can they achieve this outcome?

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Consider the following example of a prisoner's dilemma of two oligopoly firms Here, the best possible outcome is (3,3) but when the game theory is solved assuming that the two firms doesnt know each other's strategies, the outcome would be (2,2) which is not feasible. Therefore, it they workworked together, they wouwould have earned more. That is the reason why oligopoly firms should work together.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
1.What is the game theory? Why is it important, explain Prisoner's Dilemma and give three examples?...
1.What is the game theory? Why is it important, explain Prisoner's Dilemma and give three examples? 2. Explain Hotelling Law, describing the beach kiosk scenario, give three examples and a conclusion
why is the prisoner's dilemma game useful in studying oligopoly behavior? a. because oligopolies make out...
why is the prisoner's dilemma game useful in studying oligopoly behavior? a. because oligopolies make out like bandits b. to illustrate the problems encountered when making decisions under uncertainty c. to show that oligopolies behave as monopolists in the long run and earn positive economic profits. d. to illustrate how barriers to entry lead to economic profits
Game Theory: John and Dave are playing a game where they only have two strategies, either...
Game Theory: John and Dave are playing a game where they only have two strategies, either to move left or move right. The payoffs from this game are the points that each player will earn given the strategies that each play. The higher the points, the higher the payoffs each player will receive. The normal form representation of the game is presented below.                                                    DAVE                         Left                                                  Right Left 1,1 0,3 Right 3,0 2,2 John's name label should be on...
Why and how can firms in an oligopoly market structure cooperate and collude? Using concepts like...
Why and how can firms in an oligopoly market structure cooperate and collude? Using concepts like the kinked demand curve and the prisoner’s dilemma, explain why it can be difficult for firms to cooperate over a long period of time and with more than just a few firms.
Using what we know about collusion and game theory, how might the prisoners' dilemma play out...
Using what we know about collusion and game theory, how might the prisoners' dilemma play out in an oligopolistic market? Draw a 2x2 matrix, label all sides and in each cell define the payoffs for each firm.
Question 1 Which of the followings is correct according to what you learn in chapter Oligopoly?...
Question 1 Which of the followings is correct according to what you learn in chapter Oligopoly? options: a. Monopoly output is higher than the market output in an oligopoly market. b. Monopoly profit is higher than the total profit in an oligopoly market. c. Monopoly price is lower than the price in an oligopoly market. d. Monopoly outcome is more socially efficient than the outcome in an oligopoly market. Question 2 In a Nash equilibrium: options: a. The joint payoff...
Question 2: True or false (and brieáy explain why) (a) In game theory, the equilibrium of...
Question 2: True or false (and brieáy explain why) (a) In game theory, the equilibrium of any given game is the outcome that maximizes the players joint well-being. (b) It is always good to have the option to move Örst because the Örst-mover can choose his or her preferred outcome for the game.
Using the concept of minimum efficient scale (MES) at long run average cost curve explain why...
Using the concept of minimum efficient scale (MES) at long run average cost curve explain why firms in some industries can have market power to set price strategically than firms in other industries.
Read and analyze the response below. do you agree? why or why not? What do you...
Read and analyze the response below. do you agree? why or why not? What do you think? explain. (5 Sentences Minimum) Oligopoly is a market structure with few firms, none of which can shield the others from having critical impact. There is no exact furthest farthest point to the quantity of firms in an oligopoly, yet the number must be low enough that the activities of one firm fundamentally impact the others. An oligopoly is an industry ruled by a...
How is an oligopoly different than a monopoly? Which is better. Explain why.
How is an oligopoly different than a monopoly? Which is better. Explain why.
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT