Assignment # 9

Assignment for Unit 11 (Oligopoly and Game Theory)

From the following payoff matrix, where the payoffs refer to the profits that firms A and B earn by cheating and not cheating in a cartel,

(a) determine whether firms A and B face the prisoners' dilemma.(50 points)

(b) What would happen if we changed the payoff in the bottom left cell to (5.5)?

(50 points)

Firm B

Cheat

Don't Cheat

Firm A

Cheat

(4, 3)

(8, 1)

Don't Cheat

(2, 6)

(6, 5)

Assignment # 9

Assignment for Unit 11 (Oligopoly and Game Theory)

From the following payoff matrix, where the payoffs refer to the profits that firms A and B earn by cheating and not cheating in a cartel,

(a) determine whether firms A and B face the prisoners' dilemma.(50 points)

(b) What would happen if we changed the payoff in the bottom left cell to (5.5)?

(50 points)

Firm B

Cheat

Don't Cheat

Firm A

Cheat

(4, 3)

(8, 1)

Don't Cheat

(2, 6)

(6, 5)