Sarah chooses steal rather than collaborating with Steve because she wants to maximize her profit, if she shared it with Steve, they would have to equallly share the money gained.

2. How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?ü

It is like the model of oligopolistic markets. They consider their maximum profit and behave according to it. Firms should come up with strategies in order to gain maximum profit and in this situation Sarah chose to steal because it was the most maximizing process.

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2.Steve wasn’t totally wrong while he is choosing split because it is more humanistic choose in that deal because if Sarah also choose split they will share profit equally but there is risk on choosing split because Sarah may not want to share profit and she can choose steal to maximize her profit.

3.In oligopolistic markets, firms should also have strategies while they are deciding on prices because it may affect them badly or they can maximize their profits so it is same as oligopolistic markets. And we can see hear collusive agreements between oligopolists often fall apart because they cannot maximize their profits. Lastly, cartel may also fail markets because again they cannot reach maximum price to maximize their profits and by doing that firms are sharing their profits.

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*Steve was hoping that Sarah would also choose split, which isn’t that bad of an assumption. I would have done the same in his situation because choosing steal just seems so rude.

*The choices are similar because you make your decisions based on what you think the other will do. Collusive agreements often fall through because one firm will undercut the others for their own gain. The collusive agreement is the same as the split ball.

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I think your answer for the first one is really good. You described how did Sarah's way of thinking developed to make final decision. And i totally agree with your second and the third answer.

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2. I don’t think his choice was totally wrong. When we look at the percentage, since it is considered to be the safest way that can satisfy both people in this game show. I think it was the matter of trust. Steve trusted Sarah and thought that she would split the money so both of them would be satisfied from the result. However, Sarah suddenly betrayed based on her desire to earn more money. So it could be said that the miscalculation about the other’s intention was the reason why he lost this game, but his choice itself was not a bad choice.

3. This could be applied to the oligopolitic market, because like the game show, only few people are in the market and willing to split the large amount of money to satisfy their desire. In oligopoly, there are only few big corporations in the market that want to share profits from that market. I think that’s why corporations sometimes collaborate to increase or decrease the price of goods together, so both of them would be able to earn money. In Korea, for instance, the school uniform market is a oligopoly since there are only three companies that make school uniforms for all the high schools in Korea, and the three companies were accused for increasing the cost of school uniform together, to magnify their profit. However, this negotiation would not work sometimes if one betrays the others. In the market, if there are similar products, people tend to buy cheaper one. So though they promised to increase the price of their goods, if one company keeps their price low, then their profit would increase but others would not, because consumers would only buy the cheaper goods.

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I agree with you with your first answer. This is because I also believe that Sarah knew or trusted Steve that he would choose split instead of steal. This would make her confident about choosing steal.

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Steve was not totally wrong, now that he was confident that Sarah would choose split, due to the horrorized face he did when he read, steal. He wasn't wrong also because he wanted to share, and was not selfish. I would have chosen split as well because I would love to have $100,000 just to myself, but being selfish is another completely different and very bad thing to do.

The choices faced by Steve and sarah relate to the choices faced by firms in the oligopolistic markets by showing that firms are interdependent from each other. If one firm has better qualities and better in everything, then obviously that firm will win everything. Collusive agreements between oligopolists often fall apart because firms just want the best for themselves. Cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders because fo the same reasons. Since others will just be selfish, then they won't achieve anything.

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Because Sarah had made Steve genuinely promise that he was going to “split”, the rationally economic thing for her, the self-interested human, to do was to “steal” because she knew that she could steal all the wealth.

2. Was Steve totally wrong to choose split? What would you have done in his situation?

Economically, Steve was wrong to choose to split because if he had considered his strategies pertaining to the pay-off matrix, he would have realized that he could either steal all the wealth, or steal the chance for his opponent to steal all the wealth from him. Either way, he would have gone away feeling satisfied. Depending on the circumstances, I would have chosen different options. If I didn’t like or believe the player, I would have stolen, but if I was Sarah in this game, I would have split because I believed that Steve was going to split.

3. How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?

Firms in Oligopolistic markets are interdependent and must consider the actions of their rival firms. An example would be the decision about whether to advertise a product or not. Advertising costs money, increasing the firm’s costs and potentially decreasing profits, therefore the firm could be better off not advertising. However, if the rival firm chose to advertise, the loss would be much greater to the other firm than if they both advertised. Therefore, the dominant strategy would be to advertise, regardless of what the rival firm does. Oligopolies involved in collusive agreements are also coldly selfish, economically wise firms, and will always try to maximize profits, regardless of the ‘back stabbing’ it involves. This is why cartels such as OPEC fail to meet high prices, because individual firms in the long run don’t abide by the rules that were set in the leader meetings.

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2) Steve was "morally" in the right, but economics-wise in the wrong. Using a payoff matrix, it is clear that either you get half the wealth if you share, or you get nothing. Whereas, if you steal, you get either the entire wealth or nothing.

3) Firms in oligopolistic markets face similar decisions: either they choose to advertise, or they don't. This could either benefit, or hurt the firm. Cartels such as OPEC fail to achieve the high price targets because they believe that not adhering to the collusive rules that they have set will benefit their firm in the long run.

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Even though it seems shocking what happen in the program this situation occurs every day in the world. Sarah choose steal rather than collaborate with Steve because humans are greed and prefer individual success than the success of the rest in this case Steve.

Was Steve totally wrong to choose split? What would you have done in his situation?

Steve was not totally wrong to choose to split because if he had chosen to steal then he will go home the same without any money; choosing share gave him the “satisfaction” of remains with values. If I had to take the decision of steal or share I will choose steal no matter what the other person tell me in that moment.

How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?

The choices faced by Steve and Sarah relate to the choices faced by firms in oligopolistic markets because they need to get to agreements but at the end betraying the agreement will make the company be more successful than the others like Sarah. Collusive agreements often fall apart because the benefit is higher even though the risk is higher.The lack of trust and agreements between the parts in the OPEC cause the often fail to achieve the high prices targets agreed upon in the meetings of their leaders.

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I agree completely with your answer to the second question. The hard part in here is knowing what the other person thinks, because you cannot know. This reminds me of a similar game we did on a class. Each person had to write in a little piece of paper the letter A or B. If everyone wrote A, the whole class got 2 points extra on their grade. If 1 person wrte B then he would have 4 extra points and no one else would have extra points. It turned out everyone wrote A. That proves that sometimes people are not as greedy as we think (Or maybe have a good sense of self preservation jaja).

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I dont think he was totally wrong, I don't think one should criticize someone for trying to be a fair person. In the aspect of the game, he was totally wrong because either way he would be leaving with 50k and had no possibility to go with the 100k. I would have probably chosen split, but one never knows until one is in a situation like that.

Their choices reflect oligopolitic markets because it reflects what a Cartel is. In here they both represent companies with similar goals/products that are trying to work as a team in order to keep profits up, if one of them chooses to betray the other they will almost certainly get more profits, and since they are not obligated to follow the "rules" they will do it. This explains why sometimes the markets fall apart, because both parties choose to betray and they end up loosing money. OPEC is unable to get really high prices because there will always be a company that chooses to sell at a lower price to boost their sales, obligating the other companies to to so.

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I agree with your response. As you said the firms mayn't want to negotiate sometimes because most of the time they want to maximise their profits .

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Actually, Sarah have two options. One of them is take and walk away with 50K or take risk to get 100K. Also, Sarah has conversation with Steve about the situation and she wants him to trust her. Therefore, Sarah wants to make maximum profit and not willing to take 50K, but Steve is willing to take just 50 K.

2)Was Steve totally wrong to choose split? What would you have done in his situation?

I think, Steve wasn’t wrong by choosing split. Because, If I put myself into his shoes I would also choose split. Because his thought is that to safe his money. As I saidwould choose split because,” anything is better than nothing. “

3)How do the choices faced by Steve and Sarah relate to the choices faced by firms in oligopolitic markets? Now that you’ve seen this video, can you explain why collusive agreements between oligopolists often fall apart? Why do cartels such as OPEC often fail to achieve the high price targets agreed upon in meetings of their leaders?

In oligopoly market structure, their situation is an competitive oligoply, then , the competitive oligopoly changes into collusive once. Both Steve and Sarah had to options:first agree to get a specific price or they can choose the steal and make a huge amount of profit.

Generally selling a product in a cheaper price can attract a consumer. OPEC has major effect on the market. As leaders attempt to sell oil at a cheaper price, they can affect many costumers. OPEC is trying to take control of it and to set some standards for them.

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