Suppose A and B are both icecream trucks. If one of them price low and the other price high, the one price low will get all the payoff (160), the one price high will get 0. If both price low, they will both get 60. If both price high, they will both get 80.

a. Construct a Game table.

b. What is the Nash Equilibrium in this case. (60,60)

c. Is the Nash Equilibrium the most efficient option in this case? Why?

Nash (60,60) is not the most efficient in this case. (80,80) is more efficient because both A and B will get more pay-off. However, Nash is the outcome if the game is played only once. If the game is repeated played, both will have observed the other party's price, then they will both price high.