Attempts $$ Do No Harm $/5$

$6.$ Using a payoff matrix to determine the equilibrium outcome

Suppose that Slow Flow and Stew Star are the only two firms in a hypothetical market that produce and sell slow cookers. The following payoff matrix gives profit scenarios for each company $($in millions of dollars$),$ depending on whether it chooses to set a high or low price for slow cookers.

$\backslash$table$[[$Slow Flow Pricing,,Stew Star Pricing$],[,$High,Low$],[$High$,14,14,6,18],[$Low$,18,6,12,12]]$

For example, the lower$-$left cell shows that if Slow Flow prices low and Stew Star prices high, Slow Flow will earn a profit of $$18$ million, and Stew Star will earn a profit of $$6$ million. Assume this is a simultaneous game and that Slow Flow and Stew Star are both profit$-$maximizing firms.

If Slow Flow prices high, Stew Star will make more profit if it chooses a $q,$ price, and if Slow Flow prices low, Stew Star will make more profit if it chooses a $$ price.

If Stew Star prices high, Slow Flow will make more profit if it chooses a $q,$ chooses a $q,$ price. price, and if Stew Star prices low, Slow Flow will make more profit if it

Considering all of the information given, pricing high $$ a dominant strategy for both Slow Flow and Stew Star.