Question
Consider two competitors in the hardware industry, Handy Hardware and Tradie Heaven. Both firms can simultaneously choose to Discount or Not (discount). If both firms
Consider two competitors in the hardware industry, Handy Hardware and Tradie Heaven. Both firms can simultaneously choose to Discount or Not (discount). If both firms Discount the payoffs are 15 to each firm. If both firms choose Not to discount, the payoffs are 25 to each firm. If Handy Hardware chooses Discount and Tradie Heaven chooses Not, Handy gets 20 and Tradie gets 10. If Handy Hardware chooses Not to discount and Tradie Heaven chooses Discount, Handy gets 10 and Tradie gets 20. What is the outcome of this game?
Group of answer choices
It is not possible to determine the equilibrium given the information above.
One firm chooses Not and the other Discount.
Both firms choose Discount, and this is a prisoners' dilemma.
Both firms choose Discount but this is not a prisoners' dilemma.
None of the above.
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