Firms Faced with Prisoners' Dilemma Can Always Make More Profits

question 256

Essay

Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?

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Definitions:

Rational Human Beings

Individuals who use logic and reason to make decisions and understand the world, as opposed to relying solely on emotion or instinct.

Conscious Perception

The awareness of one's environment and one's own existence, sensations, and thoughts.

Allport

Gordon Allport was an influential American psychologist known for his trait theory of personality, emphasizing the uniqueness of the individual and the importance of the current context for understanding behavior.

Conscious Rational Way

A mode of thinking and decision-making where individuals deliberately use reason and logic, being aware of their thought processes.