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Game Theory - End of Chapter Problem Crazy Eddie and Loopy Larry are two electronics merchants, who sell plasma TVs at either a high price
Game Theory - End of Chapter Problem Crazy Eddie and Loopy Larry are two electronics merchants, who sell plasma TVs at either a high price or a low price. If they soth charge a high price, they will each earn high profits. If one charges a high price while the other charges a low price, the ow-price seller will get all the business and earn a huge profit. If they both charge low prices, their customers get great deals, and the merchants each earn a modest profit. a. Consider the extensive form game presented in the accompanying diagram. We assume that Crazy Eddie moves first and can choose a high price or a low price. Loopy Larry then follows with a high price or a low price. Place the payoffs at the correct locations to accurately depict the game described above. The equilibrium outeome is
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