Consider an example of the prisoner's dilemma where 2 firms are making sealed bids on a contract and each firm is allowed to bid either $100 or $180. 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

Question

Quizplus · Accepted Answer

Both firms bidding $100 is the non-cooperative outcome because it is the strategy that each firm would choose if it were acting in its own self-interest, regardless of what the other firm does.

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