What Happens When the Prisoners' Dilemma Game Is Repeated Numerous

question 373

Multiple Choice

What happens when the prisoners' dilemma game is repeated numerous times in an oligopoly market? (i)
The firms may well reach the monopoly outcome.(ii)
The firms may well reach the competitive outcome.(iii)
Buyers of the oligopolists' product will likely be worse off as a result.

• A)(i) and (ii)
• B)(ii) and (iii)
• C)(i) and (iii)
• D)(i), (ii), and (iii)

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Definitions:

Predatory Pricing

Predatory pricing involves setting prices extremely low with the intent to eliminate competition, often considered an anti-competitive practice.

Prisoners' Dilemma

A scenario in game theory where individuals act out of self-interest leading to a worse outcome than if they had cooperated, despite their best interest to work together.

Free Rider Problem

A situation in which individuals consume more than their fair share of a public resource, or shoulder less of the cost of its provision, thereby taking advantage of others' contributions.

Anti-Competitive

Practices that reduce or prevent competition in a market, leading to less favorable conditions for consumers.