Question

In most business situations where firms compete, often they can escape the prisoner's dilemma and reach the most profitable outcome. Which of the following is a reason for this?A. Firms engage in aggressive advertising to overcome the barriers to loyalty.B. Most games are one-shot games so firms learn from their mistakes.C. Most games are repeated games and firms can employ retaliation strategies against those who do not cooperate.D. Firms are constantly improving their products and anticipating changing consumer tastes.

Answer 1

The correct answer here is option C.

Step-by-step explanation:

In real life business situations the firms are able to avoid prisoner's dilemma and reach the most profitable income because the games are repetitive and goes on continuously in the market or economy. The other firms in the market can adopt a retaliation strategy if a firm does not cooperate.

In order to avoid such situation the firms generally cooperate and thus are able to escape Prisoner's dilemma.