Suppose that the firms in an oligopolistic market engage in a price war and, as a result, all firms earn lower profits. Game theory would describe this as what?
an irrational strategy
a prisoners' dilemma
a contestable market© BrainMass Inc. brainmass.com October 25, 2018, 2:51 am ad1c9bdddf
The solution provides a brief answer with some explanation. The explanation is simple and easy to understand.
Game Theory: Economics & Business
The "Prisoner's Dilemma" was the gateway to the strategic viewpoint of game theory. In this assignment, you will explore the applications of game theory to economic business decisions.
Use the following information to ensure successful completion of the assignment:
1 Include two scholarly resources other than those in the assigned readings with appropriate references and in-text citations.
2 This assignment uses a grading rubric that can be viewed at the assignment's drop box. Instructors will be using the rubric to grade the assignment; therefore, students should review the rubric prior to beginning the assignment to become familiar with the assignment criteria and expectations for successful completion of the assignment.
3 Prepare this assignment according to the APA guidelines found in the APA Style Guide, located in the Student Success Center. An abstract is not required.
In a paper of 1,750-2,000 words, discuss how game theory is being applied to business decisions. Include the following:
1 A brief overview of game theory.
2 A description of the economic implications of game theory.
A description of how game theory is being applied in making business decisions.