This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not. Given the situation in the matrix shown,the two firms are likely to collude only if:

Question

This prisoner's dilemma game shows the payoffs associated with two firms,A and B,in an oligopoly and their choices to either collude with one another or not.  Given the situation in the matrix shown,the two firms are likely to collude only if:

Quizplus · Accepted Answer

In a repeated game, the firms have the opportunity to continue to collude and earn the highest payoff in the long run. If the firms only make the decision once, there is no incentive for them to trust each other and collude. If the firms always choose to compete, they will earn a lower payoff than if they collude. The dominance of the firms in the market is not a determining factor in their decision to collude or compete.

This Prisoner's Dilemma Game Shows the Payoffs Associated with Two