Don and Susanne Have Both Been Accused of Insider Trading

question 71

Multiple Choice

Don and Susanne have both been accused of insider trading. Don knows that if he confesses while Susanne keeps silent, he will receive a 1-month jail sentence. He also knows that if Susanne confesses and he keeps silent, he will receive a 12-month jail sentence. If neither of them confesses, there will be insufficient evidence to convict either of insider trading, but there is enough evidence to convict each of them individually of obstructing justice, which carries a 2-month sentence. If both of them confess, they will both serve a 3-month jail sentence. This situation is:

• A) an example of cartel behavior.
• B) an application of the prisoner's dilemma.
• C) not realistic because those accused of insider trading always keep silent.
• D) not realistic because those accused of insider trading are never encouraged to confess.

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Definitions:

Computer-Mediated Groups

Teams or groups that interact and communicate primarily through digital platforms and technology rather than face-to-face.

Cooperative

An organization or group owned and operated for the mutual benefit of its members, or the practice of individuals working together towards a common goal.

Schmoozing

Informal conversations for the purpose of networking or building rapport and relationships, often used in professional settings.

Spontaneous Social Interaction

Unplanned and informal communication or activities between individuals, often resulting in strengthened relationships or creative collaborations.