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#3 - Use the following payoff table for Hardaway Corporation and Paxton Industries. These two firms must make simultaneous pricing decisions. They can choose low,
#3 - Use the following payoff table for Hardaway Corporation and Paxton Industries. These two firms must make simultaneous pricing decisions. They can choose low, medium, or high prices.
Paxton Industries | ||||
Low | Medium | High | ||
Hardaway Corp. | Low | A | B | C |
$30,$30 | $45,$20 | $32,$20 | ||
Medium | D | E | F | |
$20,$45 | $40,$40 | $45,$35 | ||
High | G | H | I | |
$15,$48 | $38,$52 | $50,$50 | ||
Payoffs in thousands of dollars of monthly profits. |
After the first round of eliminating dominated strategies for both firms,
- Hardaway Corporation has a dominant strategy, which is to price low.
- Hardaway Corporation has a dominant strategy, which is to price medium.
- Paxton Industries has a dominant strategy, which is to price low.
- Paxton Industries has a dominant strategy, which is to price medium.
- both "Hardaway Corporation has a dominant strategy, which is to price medium" and "Paxton Industries has a dominant strategy, which is to price medium".
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