Firms faced with prisoners' dilemma can always make more profits by engaging in opportunistic behavior. Why is this type of behavior NOT commonly found even in oligopolistic markets?
What will be an ideal response?
The prisoners' dilemma describes noncooperative behavior, but in reality most businesses engage in repeat transactions so that cooperation is likely to occur. One cooperative strategy is tit-for-tat behavior.
Economics
You might also like to view...
What is the relationship between debt, falling commodity prices and rainforest degradation?
What will be an ideal response?
Economics
A useful economic model
a. deals only with possibilities that actually occurred. b. makes only realistic assumptions. c. may make some unrealistic assumptions in order to simplify a complex reality. d. should avoid drawing conclusions that have public policy implications, since economics is not equipped to make value judgments.
Economics