Question

In what sense is OPEC's decision to cooperate as a cartel similar to the prisoners' decision to cooperate in the Prisoner's Dilemma game

Answer 1

Answer -

OPEC is a cartel which basic aim is to manage the supply of oil properly at reasonable prices in the world market for avoiding fluctuations that affect the economies of purchasing and producing countries.It consist of 14 countries which are the world's major oil exporting nations.It facilates the regular supply of oil in order to determine the price on the world market.

The prisoner's dilemma is a paradox concept in which two individuals acting in their own interests but do not produce proper output.In short both parties prefer to protect themselves at the cost or expense of the other participants.

In given case OPEC's decesion of becoming a cartel is as like as prisoner's dilemma because OPEC does not supply sufficient quantity of oil and it represents only 0.7% of total oil output.It is only the unity of major oil exporting countries for purchasing it but they can't regulate the supply of oil properly. The participants not get much benifit from it . Each country involved in OPEC is interested only for individual benifit of oil production and the cartel can't work efficiently.