Question

Explain the concept of „Nash-equilibrium‟ in the context of „Prisoner dilemma‟ problem.

Distinguish a co-operative equilibrium from a non-cooperative equilibrium in an oligopoly

model.​

Answer 1

Explanation:

Distinguish a co-operative equilibrium from a non-cooperative equilibrium in an oligopoly

model.

Answer 2

The prisoner's dilemma is one of the game theories to employ the Nash equilibrium.

• In this theory, two criminals are arrested and each is held in solitary confinement, without any means to communicate. Thus, the Nash equilibrium is for both players to deceive one another.
• A cooperative equilibrium refers to the economic conditions carried out be common game and solved by appealing to an acceptable principle of a collective result.
• It is referred to as a collusive oligopoly where the firms collaborate for determining price and output.
• Whereas, a non-cooperative game involves two or more players, where each player is presumed on knowing other strategies, and none gains anything from changing their own strategy only.