Game theory and oligopoly

1. The following payoff matrix is taken from the video clip. Does each player have a dominant strategy? If yes, what is their dominant strategy? Briefly explain why. What is equilibrium outcome of this game? Why is the game called "prisoner's dilemma?"

	Stan
Adrienne	Don't confess	Confess
Don't confess	Free, Free	20000, Free
Confess	Free, 20000	10000, 10000

2. The following payoff matrix is taken from the video clip . Two oligopoly firms are competing to earn higher revenues and profits. Does each firm have a dominant strategy? If yes, what is their dominant strategy? Briefly explain why. What is equilibrium outcome of this game? Using the strategies and payoffs in this game, briefly explain why a cartel or collusion between the firms is not stable or feasible?

	Firm 2
Firm 1	Price high	Price low
Price high	200, 200	100, 300
Price low	300, 100	80, 80