A market has three firms, all of which are suffering losses. However, none of the firms leaves the market, as each firm is hoping that another will. As a result, all firms continue to suffer losses. What type of game is this?
A) leadership
B) tit-for-tat
C) grim trigger
D) chicken

Question

Quizplus · Accepted Answer

This scenario is an example of the "chicken" game, where each firm is waiting for another to back down (leave the market) to avoid losses, demonstrating a strategic situation where players try to avoid being the first to blink, or in this case, exit the market.

A Market Has Three Firms, All of Which Are Suffering