For economy question?

Question

Nike and Reebok (athletic shoe companies) are considering whether or not to advertise during the Super Bowl. Devise a simple prisoners' dilemma game to demonstrate the strategic considerations that are relevant to this decision. Does the repeated game scenario differ from a single period game? Is it possible that a repeated game (without collusive agreements) could lead to an outcome that is better than a single-period game? Explain the circumstances in which this may be true.

Answer 1

Look up prisoner's dilemma on wiki.

Here's a hypothetical example:

Reebok
yes no
Nike yes 2, 2 10,0

no 0,10 1,1

each of these numbers is the 'payout' that the firm will recieve by choosing an option (the first number coresponds to Nike).

If each firm has one chance and they both pick their choice at the same time, they will each pick to advertise. Regardless of how many times this game is repeated, they will both advertise.

I'm exhausted, here's a site to teach you what I don't feel like teaching:
http://en.wikipedia.org/wiki/Prisoner's_dilemma
http://pespmc1.vub.ac.be/PRISDIL.html

good luck