Prisoner's Dilemma
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Please determine if firms A and B in the scenario below face the prisoners' dilemma, and explain why they do or don't face this dilemma.
________________________________________________________________________
Firm B
Low High
______________________________________________________ Price Price
Low Price (1, 1) (3, -1)
Firm A
High Price (-1, 3) (4, 2)
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This is a Prisoner's Dilemma. Firm A has no dominant strategy. However, Firm B has a dominant strategy to price low. The payoff ...
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