Laurel and Janet Are Competitors in a Local Market and Each

question 521

Multiple Choice

Laurel and Janet are competitors in a local market and each is trying to decide if it is worthwhile to advertise. If both of them advertise, each will earn a profit of $5,000. If neither of them advertise, each will earn a profit of $10,000. If one advertises and the other doesn't, then the one who advertises will earn a profit of $12,000 and the other will earn $2,000. In this version of the prisoners' dilemma, if the game is played only once, Laurel should

• A)advertise, but if the game is to be repeated many times she should probably not advertise.
• B)advertise, and if the game is to be repeated many times she should still probably advertise.
• C)not advertise, but if the game is to be repeated many times she should probably advertise.
• D)not advertise, and if the game is to be repeated many times she should still not advertise.

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Definitions:

Duty To Mitigate

The legal obligation to make reasonable efforts to minimize the damage caused by a breach of contract or other wrongful act.

Damages

Compensation sought or awarded in a legal process for loss or injury that has been suffered by an individual or entity.

Sublessee

An individual or entity that rents or leases property from a lessee rather than directly from the original owner.

Routine Care

Basic or regular maintenance or treatment that is provided for the normal and everyday healthcare needs.