Question related to oligopolies

Reference no: EM1375615

Suppose that you are on holiday in Russia, when suddenly you are arrested and accused of spying for United States. (You're innocent, of course). Your captors tell you that if you confess, you will receive a prison sentence of 2-years, while your co-conspirator (whom you've never heard of) will receive a prison sentence of twenty years. If you both confess, you'll each receive a prison sentence of five years. You're also told that your co-conspirator is being offered the same option. If you both maintain your innocence, however, there's not enough evidence to convict either of you. Applying economic theories to the problem, what should you choose to do, and why?

Reference no: EM1375615

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