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l. Donna's Deep Dish and Pierce's Pizza Pies are two restaurants in the same town, with Donna's being the larger of the two. Each restaurant
l. Donna's Deep Dish and Pierce's Pizza Pies are two restaurants in the same town, with Donna's being the larger of the two. Each restaurant can choose High or Low for its price, resulting in the payoffs below: Pierce's \\ High Low | Donna's High 156,60 132,70 The noncooperative equilibrium of this game is (High, Low), yielding profits of 132 to Donna's and 70 to Pierce's, for a total of 202. If the two could achieve (High, High), their total profit would be 156 + 60 = 216, but Pierce's would not agree to this pricing. Suppose the two stores can reach an enforceable agreement whereby both charge High and Donna's pays Pierce's a sum of money. The alternative to this agreement is simply the noncooperative equilibrium. They bargain over this agreement, and Donna's has 2.5 times as much bargaining power as Pierce's. In the resulting agreement, what sum will Donna's pay Pierce's
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