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QUESTION 6 Two firms are situated next to a lake, and it costs each firm use filters that avoid polluting the lake. However, each firm
QUESTION 6 Two firms are situated next to a lake, and it costs each firm use filters that avoid polluting the lake. However, each firm must use the lake's water in production, so it is also costly to have a polluted lake. The following is the payoff matrix that represents the payoffs associated with each firms' decisions based upon the other firm's decision. Nessie Corp. Pollute Don't pollute Loch Inc. Pollute -$2000, -$2,000 -$1000, -$2500 Don't pollute -$2500, -$1000 -$1500, -$1500 Assume that these firms participate in a one-shot, simultaneous game. Choose ALL statements below that are TRUE. There may be more than one answer. Note: all payoffs and outcomes are written as (Loch Inc., Nessie Corp.) The Nash Equilibrium is (Don't Pollute, Don't Pollute). The Nash Equilibrium is (Pollute, Pollute). There are multiple Nash Equilibria: (Pollute, Pollute) and (Don't Pollute, Don't Pollute). O There is no Nash Equilibrium. Both firms have a dominant strategy. Only one firm has a dominant strategy. No firm has a dominant strategy. This game is an example of a prisoner's dilemma. This game is NOT an example of a prisoner's dilemma
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