As the race for Academy Award nominations enters its final 10 days, Hollywood st

Question

As the race for Academy Award nominations enters its final 10 days, Hollywood studios are in the middle of the biggest Oscar spending spree in history, leading many Hollywood insiders to question whether Washington is the only town in need of campaign finance reform. Spurred by a wide-open competition for some of the top nominations, the most aggressive studios have mounted campaigns that by some estimates have already cost more than $10 million, easily double what a successful effort totaled only two years ago. A campaign of that magnitude would involve spending more than $1,500 per Oscar voter in the effort to win nominations. Question: How does the behavior of the studios fit the Prisoner's Dilemma model?

Explanation / Answer

Ans

It is prisoners dilemma because firms misled by selfinterest spend more than what is optimal. Had they cooperated they will have achieved their goal by spending less.

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