Why is this situation an example of the prisoners\' dilemma game? This game is a

Question

Why is this situation an example of the prisoners' dilemma game? This game is a type of prisoners' dilemma because

A. the game results in cooperation.

B. the firms are rivals.

C. competing maximizes joint firm profits.

D. the firms have an incentive not to collude.

E. colluding is the game's Nash equilibrium.

Proctor and Gamble (P&G;) plans to enter the Japanese market for consumer products along with two other firms. The table below show's P&G;'s profit (in thousands of dollars per month) at various combinations of prices for P&G; and the two competing firms. Competitors 1.40 - 194 1.80 - 155 1.70 - 165 - 15 47 62 52 30 1.60 -174 1.50 - 183 - 43 15 29 20 1.10 -226 - 106 1.20 - 215 1.30 - 204 - 73 -19 P&G; 1.10 1.20 1.30 1.40 1.50 1.60 1.70 1.80 -37 46 36 78 68 -44 12 -15 - 51 15 13 -28 - 57 - 93 17 - 102 What are the fims' strategies? The firms pick OA, profits. B. quantities. OC. competition. O D. advertising. OE, prices

Explanation / Answer

Answer is D. In prisoners dilemma prisoners have incentive not to collude. Same things happens here.

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