### A Question per day - Day 16

1. Two firms must each choose whether to follow strategy A, B or C. This choice must be made simultaneously and occurs in the context of a one period game. Their payoffs coincide with the profits obtained from each strategy and are given as follows:

• If firm 1 chooses A and firm 2 chooses A, then 1 receives \$21 and 2 receives \$18
• If firm 1 chooses A and firm 2 chooses B, then 1 receives \$30 and 2 receives \$16
• If firm 1 chooses A and firm 2 chooses C, then 1 receives \$50 and 2 receives \$15
• If firm 1 chooses B and firm 2 chooses A, then 1 receives \$20 and 2 receives \$10
• If firm 1 chooses B and firm 2 chooses B, then 1 receives \$25 and 2 receives \$15
• If firm 1 chooses B and firm 2 chooses C, then 1 receives \$30 and 2 receives \$8
• If firm 1 chooses C and firm 2 chooses A, then 1 receives \$15 and 2 receives \$2
• If firm 1 chooses C and firm 2 chooses B, then 1 receives \$12 and 2 receives \$3
• If firm 1 chooses C and firm 2 chooses C, then 1 receives \$15 and 2 receives \$4

a. Write this as a normal form game.
b. What outcome(s) do you predict will arise here? Explain.
c. Do these players face the "prisoners' dilemma?" Explain.