Why Can't Two Firms in a Prisoners' Dilemma Enforce a Better

question 112

Multiple Choice

Why can't two firms in a Prisoners' Dilemma enforce a better outcome that has higher payoffs?

• A) Under an outcome with higher payoffs, the outcome is not a Nash equilibrium and each firm has an incentive to change their actions.
• B) Barriers to entry
• C) Barriers to exit
• D) The Nash equilibrium in a Prisoners' Dilemma has the highest possible payoffs for both firms.

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Definitions:

Electrolytes

Substances that produce ions and conduct electricity when dissolved in water.

Not Electrolytes

Substances that do not dissociate into ions in solution and therefore cannot conduct electricity in their molten or aqueous states.

Non-electrolytes

Substances that do not produce ions when dissolved in water, and hence do not conduct electricity in solution.

Non-electrolyte

A substance that does not readily ionize when dissolved or melted and is therefore a poor conductor of electricity.