Table 17-37
Two restaurants with a focus on Mexican dining operate in Texama. Both Mitch's Mexican and Tim's Tacos need to decide whether to add Zesty Queso or Fresh Guacamole to their menus. The circumstances are that each firm wants to add only one of the two choices on their menu. Below you will find the profits for the stores, shown as: (1) the payoff to Mitch; (2) the payoff to Tim.
-Refer to Table 17-37. Based upon the information from the table, what is the Nash Equilibrium?

Question

Table 17-37​
Two restaurants with a focus on Mexican dining operate in Texama. Both Mitch's Mexican and Tim's Tacos need to decide whether to add Zesty Queso or Fresh Guacamole to their menus. The circumstances are that each firm wants to add only one of the two choices on their menu. Below you will find the profits for the stores, shown as: (1) the payoff to Mitch; (2) the payoff to Tim.  ​
-​Refer to Table 17-37. Based upon the information from the table, what is the Nash Equilibrium?

Quizplus · Accepted Answer

This is the Nash Equilibrium because neither player has an incentive to change their decision given the other player's decision. Both Mitch and Tim have a higher payoff if they choose Zesty Queso (6 vs 5 for Mitch and 6 vs 4 for Tim) instead of Fresh Guacamole. Therefore, both will choose Zesty Queso, resulting in a mutual best choice.

Table 17-37​ Two Restaurants with a Focus on Mexican Dining Operate in Operate

Table 17-37 Two Restaurants with a Focus on Mexican Dining Operate in Operate