A Nash Equilibrium may not be Pareto Efficient. There exist mechanisms to induce cooperation in the Prisoner's Dilemma game. The pursuit of self-interest without regard for others sometimes leads to outcomes that are socially desirable.

A Nash Equilibrium may not be Pareto Efficient. There exist mechanisms to induce cooperation in the Prisoner's Dilemma game. The pursuit of self-interest without regard for others sometimes leads to outcomes that are socially desirable.

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.1P

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Question

Give one example each to the following
statements. Explain your answer.
A. A Nash Equilibrium may not be Pareto
Efficient.
B. There exist mechanisms to induce
cooperation in the Prisoner's Dilemma game.
C. The pursuit of self-interest without regard for
others sometimes leads to outcomes that are
socially desirable.

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