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    Prisoner's Dilemma game

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    9) The following matrix shows the payoffs for an advertising game between the Hilton and the Oriental. 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.)

    Hilton (rows)/Oriental (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. Show your calculations.
    b. Explain the probable outcome of this game. Please support your reasoning with economics.

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    Solution Summary

    Prisoner's Dilemma game is depicted here.