In which of the following games is it clearly the case that the cooperative outcome of the game is good for the two players and bad for society?
A)Two oil companies own adjacent oil fields over a common pool of oil, and each company decides whether to drill one well or two wells.
B)Two airlines dominate air travel between City A and City B, and each airline decides whether to charge a "high" airfare or a "low" airfare on flights between those two cities.
C)Two superpowers decide whether to build new weapons or to disarm.
D)In all of the above cases, the cooperative outcome of the game is good for the two players and bad for society

Question

Quizplus · Accepted Answer

In option B, the two airlines have a dominant position in the market and could collude to charge high fares, benefiting themselves but harming society by reducing consumer welfare and limiting options for travelers. The cooperative outcome of both airlines charging low fares would benefit both players but lead to increased demand and social welfare. In options A and C, the outcomes are more complex and have potential impacts beyond just the two participants, making it difficult to definitively say whether the cooperative outcome is good or bad for society. Option D is incorrect because option B provides a clear example where the two players benefit but society does not.

In Which of the Following Games Is It Clearly the Case