The prisoner's dilemma illustrates a situation in which:
A)neither player has a dominant strategy,hence at equilibrium both are better off.
B)the Nash equilibrium is superior to the dominant-strategy equilibrium.
C)each oligopolist behaves as if it were a perfectly competitive firm.
D)each player pursuing his/her self-interest generates a collective outcome that is inferior for both.

Question

Quizplus · Accepted Answer

The prisoner's dilemma is a situation where each player pursuing their self-interest leads to a collective outcome that is inferior for both. This is because the best outcome can only be achieved if both players cooperate, but the dominant strategy for each player is to defect (choose their own interest over cooperation) regardless of what the other player does. Thus, the Nash equilibrium (where neither player can improve their outcome by changing their own strategy) results in both players defecting and a suboptimal outcome for both.

The Prisoner's Dilemma Illustrates a Situation in Which