Consider an Example of the Prisonerʹs Dilemma Where 2 Firms

question 83

Multiple Choice

Consider an example of the prisonerʹs dilemma where 2 firms are making sealed bids on a highway-construction contract and each firm is allowed to bid either $100 million or $120 million.If both firms bid the same price,the job is shared equally and each firm earns half the value of its bid.Otherwise the lowest bidder wins the contract and receives the full value of its bid (and the other bidder earns zero) .The
Non-cooperative outcome in this situation is

• A)both firms bid $50 million.
• B)both firms bid $60 million.
• C)one firm bids $100 million,the other firm bids $120 million.
• D)both firms bid $100 million.
• E)both firms bid $120 million.

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Definitions:

Archie Carroll

Archie Carroll is known for his work on corporate social responsibility (CSR), particularly for developing a pyramid model that outlines the responsibilities of businesses in society.

Responsibility Areas

Specific segments or domains within an organization or project for which individuals or teams are held accountable.

Corporate Social Responsibility

Practices and policies undertaken by corporations to positively impact society and the environment beyond their legal obligations.

Social Issues

Problems that influence a considerable number of individuals within a society, reflecting aspects of society that many people are concerned about.