Use the table below to answer questions 5-7.Assume it's a simultaneous-move game.

-What are the Nash equilibrium strategies for Firm A and Firm B respectively?

Question

Use the table below to answer questions 5-7.Assume it's a simultaneous-move game.
 
-What are the Nash equilibrium strategies for Firm A and Firm B respectively?

Quizplus · Accepted Answer

Nash equilibrium is a situation in which neither firm can improve its payoff by changing its strategy, given the strategy of the other firm. In this case, the Nash equilibrium is for both firms to choose the low strategy. If Firm A chooses the high strategy, Firm B will choose the low strategy to minimize its losses. If Firm B chooses the high strategy, Firm A will choose the low strategy to minimize its losses. Therefore, the only Nash equilibrium is for both firms to choose the low strategy.

Use the Table Below to Answer Questions 5-7