Consider the accompanying payoff matrix. When Row Resorts and Column Cruises both play their dominant strategy:
A)both firms do better than if they had both played their dominated strategy.
B)Row Resorts earns a higher profit than does Column Cruises.
C)both firms do worse than if they had both played their dominated strategy.
D)Column Cruises earns a higher profit than does Row Resorts.

Question

Consider the accompanying payoff matrix.  When Row Resorts and Column Cruises both play their dominant strategy:
A)both firms do better than if they had both played their dominated strategy. 
B)Row Resorts earns a higher profit than does Column Cruises. 
C)both firms do worse than if they had both played their dominated strategy. 
D)Column Cruises earns a higher profit than does Row Resorts.

Quizplus · Accepted Answer

This game is a prisoner's dilemma. That is, each player has a dominant strategy (offer reduced rates), and when each plays it, the resulting payoffs are smaller than if both had played their dominated strategy (keep rates high).

Consider the Accompanying Payoff Matrix