-Consider the pricing game depicted in Figure 4.1 in which the payoffs are in millions of dollars. If this game is played just once, the Nash equilibrium strategy profile is:
A) {Low price, Low price}.
B) {Low price, High price}.
C) {High price, Low price}.
D) {High price, High price}.

Question

-Consider the pricing game depicted in Figure 4.1 in which the payoffs are in millions of dollars. If this game is played just once, the Nash equilibrium strategy profile is:
A) {Low price, Low price}. 
B) {Low price, High price}. 
C) {High price, Low price}. 
D) {High price, High price}.

Quizplus · Accepted Answer

In a one-shot game, both firms have an incentive to undercut the other to capture the market, leading to a Nash equilibrium where both choose a low price strategy to maximize their individual payoffs, despite a higher price potentially yielding higher profits if chosen by both.

-Consider the Pricing Game Depicted in Figure 4