Game theory shows that
A)sometimes pursuing profit maximization will not yield the highest joint profit.
B)interdependencies between firms have to be taken into account when few firms dominate the market.
C)in an oligopolistic market,firms are likely to collude.
D)All of the above.

Question

Quizplus · Accepted Answer

Game theory considers the interdependence between firms when making strategic decisions. In some cases, pursuing profit maximization may not lead to the highest joint profit, which is why cooperation and coordination between firms may lead to better outcomes. In an oligopolistic market, firms may be more likely to collude, as they are a few big players in the market. Therefore, all the options A, B, and C are correct, and the answer is D.

Game Theory Shows That