Which game does the Cournot model most resemble and why?
A)the Battle of the Sexes because firms need to coordinate their outputs.
B)the Battle of the Sexes because firms disagree on which outcome is best.
C)the Prisoners Dilemma because firms don't maximize joint payoffs in equilibrium.
D)the Prisoners Dilemma because firms play dominant strategies.

Question

Quizplus · Accepted Answer

The Cournot model resembles the Prisoners Dilemma because firms in the model do not maximize joint payoffs in equilibrium. Each firm has an incentive to produce more output than the other, which results in a situation where both firms end up worse off than if they had coordinated their output choices. Additionally, in the Prisoners Dilemma, both players have a dominant strategy, which is to defect, just as firms in the Cournot model have a dominant strategy to produce more output than their competitor.

Which Game Does the Cournot Model Most Resemble and Why