The following matrix shows strategies and payoffs for two firms that must decide how to price. a.
Question:
a. Does either firm have a dominant strategy, and if so, what is it?
b. What is the Nash equilibrium of this game?
c. Why would this be called a prisoner's dilemma game?
Transcribed Image Text:
Firm 2 PRICE HIGH PRICE Low PRICE HIGH 400, 400 700,-50 PRICE LOWw -50, 700 100, 100 FIRM 1
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a The dominant strategy for each firm is to price low because no matter what the other f...View the full answer
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