Figure 17-4. Two companies, Acme and Bilco, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.

-Refer to Figure 17-4.The dominant strategy for Acme is to

Question

Figure 17-4. Two companies, Acme and Bilco, are sellers in the same market. Each company decides whether to charge a high price or a low price. In the figure, the dollar amounts are payoffs and they represent annual profits for the two companies.
 
-Refer to Figure 17-4.The dominant strategy for Acme is to

Quizplus · Accepted Answer

In a typical prisoner's dilemma scenario, both firms have a dominant strategy to charge a low price to maximize their own payoff, even though mutual cooperation (charging a high price) would lead to a better collective outcome.