There are only two barber shops, Buzz Cuts and Great Clips, in a small town. Each firm can set either a high price or a low price; customers view these two firms as nearly perfect substitutes. The table shows the payoff matrix. If this game is played only once, and each firm sets its price independently, what is the Nash equilibrium? Is this game a prisoners' dilemma? Explain your answers.

Question

There are only two barber shops, Buzz Cuts and Great Clips, in a small town. Each firm can set either a high price or a low price; customers view these two firms as nearly perfect substitutes. The table shows the payoff matrix. If this game is played only once, and each firm sets its price independently, what is the Nash equilibrium? Is this game a prisoners' dilemma? Explain your answers.
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Quizplus · Accepted Answer

The Answer of There are only two barber shops, Buzz Cuts and Great Clips, in a small town. Each firm can set either a high price or a low price; customers view these two firms as nearly perfect substitutes. The table shows the payoff matrix. If this game is played only once, and each firm sets its price independently, what is the Nash equilibrium? Is this game a prisoners' dilemma? Explain your answers.
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There Are Only Two Barber Shops, Buzz Cuts and Great