When Modeling an Oligopoly as a Prisoners Dilemma Problem an Agreement

question 60

Multiple Choice

When modeling an oligopoly as a prisoners dilemma problem an agreement is a Nash equilibrium if

• A)if it allows at least one party to cheat
• B)if it is not a illegal
• C)it is self enforcing
• D)both parties are allowed to cheat

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Definitions:

Hedge Ratio

A ratio used to calculate the number of derivatives needed to hedge a particular position, aiming to provide protection against adverse price movements.

Dollar Change

The difference in the price of a security from one trading period to the next, expressed in dollars.

Exercise Price

The amount for which someone holding an option is allowed to buy (for call options) or sell (for put options) the base asset.

Hedge Ratio

A ratio used to determine the amount of derivatives needed to hedge a particular exposure, indicating the relationship between the position size in hedging instruments and the size of the exposure.