Table 17-37
Two restaurants with a focus on Mexican dining operate in Texama. Both Mitch's Mexican and Tim's Tacos need to decide whether to add Zesty Queso or Fresh Guacamole to their menus. The circumstances are that each firm wants to add only one of the two choices on their menu. Below you will find the profits for the stores, shown as: (1) the payoff to Mitch; (2) the payoff to Tim.
-Refer to Table 17-37. Based upon the information from the table, you can conclude that this game is an example of

Question

Table 17-37​
Two restaurants with a focus on Mexican dining operate in Texama. Both Mitch's Mexican and Tim's Tacos need to decide whether to add Zesty Queso or Fresh Guacamole to their menus. The circumstances are that each firm wants to add only one of the two choices on their menu. Below you will find the profits for the stores, shown as: (1) the payoff to Mitch; (2) the payoff to Tim.  ​
-Refer to Table 17-37. Based upon the information from the table, you can conclude that this game is an example of ​

Quizplus · Accepted Answer

This game is an example of a prisoner's dilemma. The dominant strategy for both Mitch and Tim is to add Zesty Queso to their menu, which results in a Nash equilibrium where both firms earn lower profits than if they both chose Fresh Guacamole. However, if either one decides to add Fresh Guacamole while the other adds Zesty Queso, that firm earns a higher profit due to being the only one offering that item. Therefore, even though the best outcome for both firms would be to both offer Fresh Guacamole, the dominant strategy for each firm is to add Zesty Queso, resulting in a suboptimal outcome for both.

Table 17-37​ Two Restaurants with a Focus on Mexican Dining Operate in Operate

Table 17-37 Two Restaurants with a Focus on Mexican Dining Operate in Operate