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

question 118

Multiple Choice

Consider an example of the prisoner's dilemma where 2 firms are making sealed bids on a highway-construction contract and each firm is allowed to bid either $100 million or $120 million.If both firms bid the same price,the job is shared 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) .The non-cooperative outcome in this situation is

• A)both firms bid $50 million.
• B)both firms bid $60 million.
• C)one firm bids $100 million,the other firm bids $120 million.
• D)both firms bid $100 million.
• E)both firms bid $120 million.

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Definitions:

Glossopharyngeal Nerve

A cranial nerve that manages taste and other functions in the tongue and throat.

Paralysis

The loss of the ability to move and sometimes to feel anything in part or most of the body, typically as a result of illness, injury, or poison.

Facial Nerve

The seventh cranial nerve that controls the muscles of facial expression.

Right Side

Referring to the right half or portion of an object, body, or directional orientation.