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(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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