How is the prisoner's dilemma similar to the problem faced by firms in an oligopoly in Canada?
A) Although they are interdependent, firms cannot legally communicate on pricing decisions because collusion is illegal in Canada
B) Firms are dependant and can communicate their pricing decisions with one another because collusion is legal in Canada
C) Firms are independent so cooperation in pricing is standard in Canada.
D) Firms are interdependent so failure to cooperate always leads to better outcomes than cooperation in Canada

Question

Quizplus · Accepted Answer

The prisoner's dilemma refers to a scenario where two individuals, who would benefit from cooperating, may choose not to do so out of self-interest. Similarly, firms in an oligopoly in Canada are interdependent and would benefit from cooperating on pricing decisions. However, collusion is illegal in Canada, so they cannot legally communicate on pricing decisions, leading to a situation similar to the prisoner's dilemma.

How Is the Prisoner's Dilemma Similar to the Problem Faced