Use the information in the following table, which summarizes the payoffs i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:
Firm 2
$$\begin{array} { | c | l | c | c | }
\hline & & \text { Average Quality } & \text { HighQuality } \
\hline \text { Firm 1 } & \text { AverngeQunlity } & 600,600 & 400,1100 \
\hline & \text { HighQuality } & 1100,400 & 900,900 \
\hline
\end{array}$$ a. What is each player's dominant strategy? Explain your reasoning.
b. Referring to the table above, is this an example of a prisoner's dilemma game? Why or why not?
c. Is there a Nash equilibrium? If so, what is it?

Question

Use the information in the following table, which summarizes the payoffs i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:
Firm 2
 $$\begin{array} { | c | l | c | c | } 
\hline & & \text { Average Quality } & \text { HighQuality } \
\hline \text { Firm 1 } & \text { AverngeQunlity } & 600,600 & 400,1100 \
\hline & \text { HighQuality } & 1100,400 & 900,900 \
\hline
\end{array}$$ a. What is each player's dominant strategy? Explain your reasoning.
b. Referring to the table above, is this an example of a prisoner's dilemma game? Why or why not?
c. Is there a Nash equilibrium? If so, what is it?

Quizplus · Accepted Answer

The Answer of Use the information in the following table, which summarizes the payoffs i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:
Firm 2
 $$\begin{array} { | c | l | c | c | } 
\hline & & \text { Average Quality } & \text { HighQuality } \
\hline \text { Firm 1 } & \text { AverngeQunlity } & 600,600 & 400,1100 \
\hline & \text { HighQuality } & 1100,400 & 900,900 \
\hline
\end{array}$$ a. What is each player's dominant strategy? Explain your reasoning.
b. Referring to the table above, is this an example of a prisoner's dilemma game? Why or why not?
c. Is there a Nash equilibrium? If so, what is it?

Use the Information in the Following Table, Which Summarizes the Payoffs