Question
Two concert promoters, Alpha and Best, simultaneously (and independently) decide on the quality of the concert they will put on the same night: High (H),
Two concert promoters, Alpha and Best, simultaneously (and independently) decide on the quality of the concert they will put on the same night: High (H), Medium (M), or Low (L) quality. A high-quality concert costs the promoter $3, a medium-quality concert cost $2, and a low-quality concert cost $1.
Their revenues are as follows:
If both choose high quality, or both choose low quality, then each promoter
makes $4 in revenue.
If both choose medium quality, then each promoter makes $3 in revenue.
If one promoter chooses high quality, and the other promoter chooses low
quality, then each promoter makes $6 in revenue.
If one promoter chooses medium quality, and the other promoter does not,
then the medium quality promoter makes $6 in revenue, and the other promoter makes $3 in revenue.
The payoff to each firm is their profit.
A). Draw the payoff (profit) matrix for this game.
B). Find all the Nash equilibrium, if any.
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