Consider an Example of the Prisoner's Dilemma Where 2 Firms

question 91

Multiple Choice

Consider an example of the prisoner's dilemma where 2 firms are making sealed bids on a contractand each firm is allowed to bid either $100 or $180. If both firms bid the same price, the job isshared 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) . Thenon-cooperative outcome in this situation is

• A) one firm bids $100, the other firm bids $180.
• B) both firms bid $90.
• C) both firms bid $100.
• D) both firms bid $180.
• E) both firms bid $50.

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Definitions:

Pluralist Theory

A theory of politics and policy-making that emphasizes the role of diverse, competing interest groups in shaping public policy.

Public Good

Describes a commodity or service that is provided without profit to all members of a society, either by the government or a private individual or organization.

Competing Interests

Situations where different groups or individuals have opposing objectives, often leading to conflict or negotiation.

Direct Marketing

A form of advertising that allows businesses to communicate straight to the customer, often through a variety of channels.