An outcome of the prisoner's dilemma in which each player does the best that he/she can do, given what the other players are doing is known as a
a. negotiated settlement
b. monopoly
c. cooperative oligopoly
d. Nash equilibrium
An outcome of the prisoner's dilemma in which each player does the best that he/she can do, given what the other players are doing is known as a
a. negotiated settlement
b. monopoly
c. cooperative oligopoly
d. Nash equilibrium
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The following is the payoff matrix for a prisoner's dilemma.
PRISONER'S DILEMMA | Player B | ||
Confess | Deny | ||
Player A | Confess | -3, -3 | 0, -6 |
Deny | -6, 0 | -1, -1 |
- a. What is a dominant strategy?
- b. Is there a dominant strategy?
- c. What is a Nash Equilibrium?
- d. Is there a Nash equilibrium?
- e. What does this mean for Adam Smith%u2019s claim that the pursuit of self-interest by individuals who are guided by the Invisible Hand of the market will result in optimal outcomes?
1. Which of the following statements about oligopolies is not correct?
a. | Oligopolistic firms always charge the monopoly price. | |
b. | Oligopolistic firms are interdependent in a way that firms in perfect competition are not. | |
c. | An oligopolistic market has only a few sellers. | |
d. | The actions of any one seller can have a large impact on the profits of all other sellers. |
2. Which is true of an oligopoly market that reaches a Nash equilibrium?
a. | The firms will not have behaved as profit maximizers. | |
b. | A firm will have chosen its best strategy, given the strategies chosen by other firms in the market. | |
c. | A firm will not take into account the strategies of competing firms. | |
d. | The market price will be different for each firm. |
3. In game theory, what is a dominant strategy?
a. | the best strategy for a player to follow, regardless of the what strategies other players use | |
b. | a strategy that makes every player better off | |
c. | a strategy that must appear in every game | |
d. | the best strategy for a player to follow only if other players are cooperative |
4. Which of the following situations produces the largest profits for oligopolists?
a. | The firms reach a Nash equilibrium. | |
b. | The firms combine to produce the monopoly output level. | |
c. | The firms set prices equal to marginal cost. | |
d. | The firms produce a quantity of output that lies between the competitive outcome and the monopoly outcome. |