The story of the prisoners' dilemma shows why
A)predatory pricing is clearly not in society's best interest.
B)economists are unanimous in condemning resale price maintenance, since it inevitably reduces competition.
C)oligopolies can fail to act independently, even when independent decision-making is in their best interest.
D)oligopolies can fail to cooperate, even when cooperation is in their best interest.

Question

Quizplus · Accepted Answer

The prisoners' dilemma is a classic game theory scenario where two prisoners can either cooperate with each other and both receive a lesser sentence or defect and potentially receive a harsher sentence. The dilemma shows that even though cooperation is in both prisoners' best interest, they may defect due to the fear of the other prisoner defecting. This same logic can be applied to oligopolies, where cooperation between firms can lead to mutual benefits, but the fear of defection can cause them to fail to cooperate, even when it is in their best interest. Therefore, the answer is D - the story of the prisoners' dilemma shows why oligopolies can fail to cooperate, even when cooperation is in their best interest.

The Story of the Prisoners' Dilemma Shows Why