Game theory reveals that
A) the equilibrium might not be the best solution for the parties involved.
B) firms in oligopoly are not interdependent.
C) each player looks after what is best for the industry.
D) if all firms in an oligopoly take the action that maximizes their profit, then the equilibrium will have the largest possible combined profit of all the firms.
E) firms in an oligopoly choose their actions without regard for what the other firms might do.

Question

Quizplus · Accepted Answer

Game theory shows that the equilibrium of a game may not necessarily be the best outcome for all parties involved. It is possible for one or more players to benefit more from deviating from the equilibrium strategy, which can lead to suboptimal outcomes.

Game Theory Reveals That