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Unformatted text preview: Discussion 3.2 In your text (refer to Chapter 17, Figure 4) you see a common resources game that asks "Should we drill another well or not?" Consider this game and describe what the dominant strategy is (as per your text). Consider what will happen if this becomes a repetitive game (both oil companies knowing they will share many oil fields over the next years). Will the dominant strategy survive, andif notwhat strategy could emerge as "best"? Response A dominate strategy is a strategy that works better than any other strategy regardless of what the other player is doing. Now in the case of Exxon and Texaco, neither company wants to cooperate even though cooperation would be better off for both. Both have a dominate strategy of drilling two wells which is senseless since each would still bear the cost of drilling the second well which in turns means less profit, not to mention cooperation would be better for society. Continued situations of this nature by both companies could result in depletion of that natural resource. situations of this nature by both companies could result in depletion of that natural resource....
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This note was uploaded on 04/07/2012 for the course ECONOMICS 101 taught by Professor Dr.edmondson during the Spring '11 term at Thomas Edison State.
- Spring '11