Question
The following payoff diagram shows profits for a year for companies A & B. Company A Company B Price Strategy Low High Low $0, $0
The following payoff diagram shows profits for a year for companies A & B.
Company A | |||
Company B | Price Strategy | Low | High |
Low | $0, $0 | $11, ($2) | |
High | ($2), $11 | $6, $6 |
Based on this payoff diagram, determine the optimal pricing strategy in a:
1/One-shot simultaneous game.
2/Multi-shot repeating game with a 60% chance that the game would end each year.
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