There are three noodle shops in town. Their shares of the market are Nguyen's Noodles (50%), Pham's Pho (37%), and Nam's Noodles (13%). Nam lowers the price of its noodles, hoping to pressure the other noodle shops to lower their prices, but they do not. What type of game does this represent?

Question

Quizplus · Accepted Answer

This scenario represents a "leadership" game, where Nam's Noodles attempts to lead by changing its strategy (lowering prices) in hopes of influencing the market and possibly forcing the other players (Nguyen's Noodles and Pham's Pho) to follow suit. However, the other players do not respond by lowering their prices, indicating Nam's attempt to establish itself as a market leader or to change the competitive dynamics through its unilateral action.

There Are Three Noodle Shops in Town