Question
University Subs and Subway are the only two sandwich shops in Lake Charles. If either runs a special 2-for-1 promotion, both are able to keep
University Subs and Subway are the only two sandwich shops in Lake Charles. If either runs a special 2-for-1 promotion, both are able to keep their prices high and earn $10,000 a month. However, when both don't run promotions, either profits fall to $1000. Finally, if one runs a promotion and other does not, the shop that runs promotion earns a profit of $15,000 and the other loses $5000
a. Construct a payoff matrix for this game and represent the game in normal form
b.What is the dominant strategy for Subway? What should it do?
c. If any what is the equilibrium in the game?
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