Table 14-4 Alpha and Beta Are the Only Firms Selling Gyros in Only

Table 14-4

Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 14-4 shows the payoff matrix for this game.
-Refer to Table 14-4.How are the firms in this game caught in a prisoner's dilemma?

A) They are not in a prisoner's dilemma because there is one clear strategy for each.
B) They would be more profitable if they refrained from offering a student discount, but each fears that if it does not offer a student discount it will lose customers.
C) 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.
D) Only the first mover is caught in a prisoner's dilemma because the second has a chance to observe and respond.