Table 17-7
Two companies, Wonka and Gekko, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits (in millions of dollars) for the two companies.

-Two suspected drug dealers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of marijuana and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison. If you both confess, you will each get 5 years." If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana. If each suspected drug dealer follows a dominant strategy, what should he/she do?
A)Confess regardless of the partner's decision
B)Confess only if the partner confesses
C)Don't confess regardless of the partner's decision
D)Don't confess only if the partner doesn't confess

Question

Table 17-7
Two companies, Wonka and Gekko, each decide whether to produce a good quality product or a poor quality product. In the figure, the dollar amounts are payoffs and they represent annual profits (in millions of dollars) for the two companies.
 
-Two suspected drug dealers are stopped by the highway patrol for speeding. The officer searches the car and finds a small bag of marijuana and arrests the two. During the interrogation, each is separately offered the following: "If you confess to dealing drugs and testify against your partner, you will be given immunity and released while your partner will get 10 years in prison. If you both confess, you will each get 5 years." If neither confesses, there is no evidence of drug dealing, and the most they could get is one year each for possession of marijuana. If each suspected drug dealer follows a dominant strategy, what should he/she do?
A)Confess regardless of the partner's decision 
B)Confess only if the partner confesses 
C)Don't confess regardless of the partner's decision 
D)Don't confess only if the partner doesn't confess

Quizplus · Accepted Answer

This scenario is an example of the Prisoner's Dilemma, where the dominant strategy for each player (in this case, each suspected drug dealer) is to confess, regardless of what the partner does. This is because confessing offers a better outcome (either immunity or a reduced sentence) compared to not confessing, regardless of the partner's decision.

Table 17-7 Two Companies, Wonka and Gekko, Each Decide Whether to Produce