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Two firms must simultaneously choose their prices, setting either H or L. Suppose payoffs are given by the values in the table below. 20, 20
Two firms must simultaneously choose their prices, setting either H or L. Suppose payoffs are given by the values in the table below. 20, 20 0, 30 30, 0 15, 15 L Firm 1 Firm 2 L H H (6) (3 points) What is the Nash equilibria of the one-shot game? (7) (5 points) Suppose the game is indefinitely repeated and that the relevant discounted rate is = 1 1+r , where r = 0.1 is the interest rate. What are the Nash equilibria?
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