In a Repeated Prisoners' Dilemma Decision,both Managers Can Make Credible

question 4

Multiple Choice

In a repeated prisoners' dilemma decision,both managers can make credible threats to punish cheating because

• A)if either manager cheats,the other manager can increase its profit by also cheating.
• B)both of the cheating cells in the payoff table are strategically stable cells.
• C)when both firms cheat,they both avoid the Nash equilibrium cell.
• D)both a and C

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Definitions:

Variable Input

Inputs or resources whose quantity can be changed in the short term to adjust the level of production, such as labor or raw materials.

Labor Market

The marketplace in which employers find workers and workers find jobs, characterized by the demand and supply of labor.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production, holding other factors constant.

Worker

An individual employed to perform tasks or services in exchange for compensation, such as wages or salaries.