In a prisoner's dilemma situation where firms are setting prices, the dominant strategy is always to charge the price that leads to maximum profits for all firms.

Question

In a prisoner's dilemma situation where firms are setting prices, the dominant strategy is always to charge the price that leads to maximum profits for all firms.
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Quizplus · Accepted Answer

In a prisoner's dilemma situation, the dominant strategy for each firm is often to undercut the other, leading to lower prices and profits for all, rather than cooperating to charge a price that maximizes collective profits.

In a Prisoner's Dilemma Situation Where Firms Are Setting Prices