Question

Suppose that Boeing and Airbus have plans to develop a similar jet airliner. Unfortunately, if both produce this aircraft, then both companies will take a loss. In game theory, which of the following would be most relevant?

Group of answer choices

prisoner's dilemma

chicken game

pirate game

None of the answers listed here

battle of the sexes

Answer 1

prisoner's dilemma

Each company has two choices to produce or not to produce. But both producing will lead to a simultenous loss for both companies. But if there is a likelyhood one produces and the other doesn't then the one which produces will make a marginal profit.

Thus they will be in a position where they wont produce but are willing to produce. This is a classic example of prisoner's dilemma.

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