Question:
How can the Prisoners’ Dilemma show First-Mover Advantage (And the Problem with Informal Collusive Oligopolies)
Author: eric_galvaoAnswer:
-Suppose Apple and Samsung are the only 2 Firms in the Smartphone Industry. -Each of them must decide how much Output to Make. Low or High -Apple and Samsung Knows that the Other Firm is trying to Guess what Their Output will be. -Apple and Samsung know that their Own Choices affect the Other. -The Result is a Payoff Matrix, where Both can Win, Lose, or one can Win. (Both Win = Both pick Low Output) (Both Lose = Both pick High Output) (Apple Win = Samsung makes Low, Apple makes High, and vice er versa)
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