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Prisoner's Dilemma game

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The following matrix shows the payoffs for an advertising game between Coke and Pepsi. The firms can choose to advertise or to not advertise. Numbers in the matrix represent profits; the first number in each cell is the payoff to Coke. (Numbers in millions.)

Coke (rows)/ Pepsi(columns) Advertise Don't Advertise
Advertise (10, 10) (500, -50)
Don't Advertise (-50, 500) (100, 100)

a. Explain why this would be described as a Prisoner's Dilemma game
b. Explain the probable outcome of this game

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Solution Preview

a. Explain why this would be described as a Prisoner's Dilemma game
In game theory, the prisoner's dilemma is a type of non-zero-sum game in which two players try to get rewards by cooperating (don't ad) with or betraying (ad) the other player. In this game, as in many others, it is assumed that the primary concern of each ...

Solution Summary

Prisoner's Dilemma game is denoted.

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