Question
(a) The table below shows the payoff matrix in terms of profit for two stalls, A and B, with two pricing strategies, high price and
(a) The table below shows the payoff matrix in terms of profit for two stalls, A and B, with two pricing strategies, high price and low price.
StallB | |||
HighPrice | LowPrice | ||
StallA | HighPrice | $20mforStallA $8.5mforStallB | $30mforStallA $6.5mforStallB |
Low Price | $7.5mforStallA $50mforStallB | $25mforStallA $40mforStallB |
Solve for the Nash equilibrium and explain whether this game is a prisoner's dilemma game.
(b) If the game becomes a sequential game where Stall A gets to move first, construct a decision tree diagram and solve the game using roll-back method. Explain your answers.
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Understanding Basic Statistics
Authors: Charles Henry Brase, Corrinne Pellillo Brase
6th Edition
978-1133525097, 1133525091, 1111827028, 978-1133110316, 1133110312, 978-1111827021
