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Topic on game theory Consider a game between two supermarkets FP and SS in CCK Mall. For every week, each firm will decide whether to
Topic on game theory
Consider a game between two supermarkets FP and SS in CCK Mall. For every week, each firm will decide whether to offer a discount price or maintain the normal price for all the items in the store. If they both offer a discount price, each can have a payoff of $15M for that week. If they both maintain a normal price, each can have a payoff of $16M for that week. If only one of them offers a discount price, then the firm offering the discount price will receive $17M for that week while the firm which maintains the normal price will receive $14M for that week. Suppose that both companies agree to maintain the normal price each week and this game is repeated weekly forever. Assume also that SS uses a Tit-For-Tat strategy. Is it worthwhile for FP to defect just once then return to cooperating in the subsequent weeks, given the weekly total rate of return r=0.5 ? ExplainStep by Step Solution
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