Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050



Principles of Microeconomics

7th Edition
N. Gregory Mankiw
ISBN: 9781305156050
Textbook Problem

Tell the story of the prisoners’ dilemma. Write down a table showing the prisoners' choices and explain which outcome is likely. • What does the prisoners’ dilemma teach us about oligopolies?

To determine
Story of Prisoner’s dilemma.


The prisoner’s dilemma is the story about two captured prisoners. It explains the story about criminals who have been captured by the police. There are two persons A’ ‘and ‘B’. The police got all the evidence against both ‘A’ and ‘B’. So, ‘A’ and ‘B’ spent 1 year in jail. The police thought that the two criminals would have committed a bank robbery together, but they lack hard evidence to convict them of this major crime.

To prove this, police questioned both person separately, if ‘A’ confess to the bank robbery and get denied by ‘B’, they will provide concession to ‘A’ to go free, and ‘B’ has to spend 20 years in jail and vice versa. If both confess to crime, then each person gets 8 years to be jail. If both denied, then both can be freed.

Table 1 shows the pay-off of the each person based on their decision...

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