Multiple Choice


-Refer to Table 10 -1. How are the firms in this advertising game caught in a prisoners' dilemma?
A) Since each firm is uncertain about the other's behavior, each will adopt a wait -and -see attitude which results in no increase in market share and no new customers.
B) Only the first mover is caught in a prisoners' dilemma because the second has a chance to observe and respond.
C) They are not in a prisoners' dilemma because there is one clear strategy for each.
D) They would be more profitable if they refrained from advertising but each fears that if it does not advertise, it will lose customers.
Correct Answer:
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