Question
Target and Walmart are trying to decide how to price their Air Fryers for an upcoming Labor Day sale. They will either keep prices the
Target and Walmart are trying to decide how to price their Air Fryers for an upcoming Labor Day sale. They will either keep prices the same ("keep same") or put the product on sale ("put on sale"). Their respective payoffs depend on how the firm prices their product. In other words, Target and Walmart are two firms in a simultaneous game. The payoffs associated with each outcome are given below. Note that "M" means "million", e.g. 10M = $10 Million. Target's payoffs are to the left of the comma and Walmart's are to the right of the comma.
Walmart | |||
Keep Same | Put on Sale | ||
Target | Keep Same | 10M, 10M | 1M, 12M |
Put on Sale | 12M, 1M | 8M, 8M |
What is the Nash Equilibrium of the above game?
A: Target will keep prices the same; Walmart will keep prices the same.
B: Target will keep prices the same; Walmart will put the air fryer on sale..
C: Target will put the air fryer on sale; Walmart will keep prices the same.
D: Target will put the air fryer on sale; Walmart will put the air fryer on sale.
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