Table 11-6
LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 11-6 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 11-6.What is the Nash equilibrium in this game?

Question

Table 11-6
  LimoZeenz and AirPorter and are the only two airport shuttle and limousine rental service companies in the mid-sized town of Shady Shores. Each firm must decide on whether to offer its customers a mid-week discount for airport transportation. Table 11-6 shows the payoff matrix for profits earned by each company based on either offering or not offering the discount.
-Refer to Table 11-6.What is the Nash equilibrium in this game?

Quizplus · Accepted Answer

The Nash equilibrium occurs when each player chooses the best strategy given the other player's choice. In this game, if AirPorter offers the discount, LimoZeenz is better off not offering the discount, as they will earn a higher profit of $8,000 compared to $5,000. Similarly, if LimoZeenz offers the discount, AirPorter is better off not offering the discount, as they will earn a higher profit of $12,000 compared to $7,500. Therefore, the only Nash equilibrium is for AirPorter to offer the discount and LimoZeenz to not offer the discount.

Table 11-6 LimoZeenz and AirPorter and Are the Only Two