8.

Definition: Nash Equilibrium The position resulting from

everyone from everyone making their optimal decision based
on their assumptions about their rivals‘ decisions. Without
collusion, there is no incentive or any firm to move from this
position.
9. Definition: Prisoner‟s dilemma Where two or more firms (or
people), by attempting independently to choose the best
strategy for whatever the other(s) are likely to do, end up in a
worse position than if they had co-operated in the first place.

2.7 QUESTIONS

1. Give one or two other examples (economic or non-economic)

of the prisoners' dilemma.
2. Discuss various types of Price leadership.
3. Define and explain the Theory of Games.



