The payoff matrix below shows the payoffs (in millions of dollars)for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital.
This game is an example of a:
A)cartel.
B)credible promise.
C)prisoner's dilemma.
D)game with multiple equilibria.

Question

The payoff matrix below shows the payoffs (in millions of dollars)for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital.  
 This game is an example of a:
A)cartel. 
B)credible promise. 
C)prisoner's dilemma. 
D)game with multiple equilibria.

Quizplus · Accepted Answer

A prisoner's dilemma is a game in which each player has a dominant strategy, and when each plays it, the resulting payoffs are smaller than if both had played a dominated strategy.

The Payoff Matrix Below Shows the Payoffs (In Millions of Dollars)for