Question

CHAPTER 17 Doubts: Please answer these in as much detail as possible. Thanks!

What are the steps to identify if a payoff matrix is a prisoner's dilemma?

What is the difference between zero and non-zero sum, and its implications?

What is a simultaneous dominant strategy?

Why are cartels problematic?

Can oligopolies sustain profits in the long-run? Why, or why not?

Answer 1

What are the steps to identify if a payoff matrix is a prisoner's dilemma?
There are few factors which would help one identify a payoff matrix to be prisoner's dilemma one like both the players in prisoner's dilemma have dominant strategy which is same for both. The outcome is never the one with maximum collective payoff for both. The chosen strategy for each players is to confess cheat or any other option which reflects self interest more than mutual interest.