Consider an example of the prisoner's dilemma where 2 firms are making sealed bids on a contractand each firm is allowed to bid either $100 or $180. If both firms bid the same price, the job isshared 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) . Thenon-cooperative outcome in this situation is
A) one firm bids $100, the other firm bids $180.
B) both firms bid $90.
C) both firms bid $100.
D) both firms bid $180.
E) both firms bid $50.
Correct Answer:
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