Suppose Firm a and Firm B Are Considering Whether to Invest

question 76

Multiple Choice

Suppose Firm A and Firm B are considering whether to invest in a new production technology. For each firm, the payoff to investing (given in thousands of dollars per day) depends upon whether the other firm invests, as shown in the payoff matrix below.  
Is this game a prisoner's dilemma?

• A)Yes.
• B)No.
• C)It cannot be determined.
• D)Only when both Firm A and Firm B invest.

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