9.2 In game 1, no matter what Chrysler does, GM will do better to invest, and no

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9.2 In game 1, no matter what Chrysler does, GM will do better to invest, and no matter what GM does, Chrysler will do better to invest. Each has a dominant strategy, but in following it, each does worse than if it had not invested. So game 1 is a prisoner’s dilemma. In game 2, no matter what Chrysler does, GM again will do better to invest; but no matter what GM does, Chrysler will do better not to invest. Each has a dominant strategy, and in following it, each gets a payoff of 10—which is 5 more than if each had played its dominated strategy. So game 2 is not a prisoner’s dilemma. (LO2)

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Principles Of Microeconomics

ISBN: 9781264250387,9781264250448

8th Edition

Authors: Robert H. Frank , Ben Bernanke , Kate Antonovics , Ori Heffetz

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