In the game depicted below,firms 1 and 2 must independently decide whether to charge high or low prices. $\begin{array}{c}
\text { Firm 2}\
\text { Firm 1}
\begin{array}{|l|l|l|}
\hline &\text { High Price } & \text { Low Price }\
\hline & & \
\text { High Price } & (10,10) & (5,-5) \
\hline & & \
\text { Low Price } & (-5,5) & (0,0)\
\hline
\end{array}\end{array}$ Which of the following are secure strategies for players 1 and 2,respectively?
A) (high price, high price)
B) (high price, low price)
C) (low price, high price)
D) (low price, low price)

Question

In the game depicted below,firms 1 and 2 must independently decide whether to charge high or low prices. $\begin{array}{c}
\text { Firm 2}\
\text { Firm 1}
\begin{array}{|l|l|l|} 
\hline &\text { High Price } & \text { Low Price }\
\hline & & \
\text { High Price } & (10,10) & (5,-5) \
\hline & & \
\text { Low Price } & (-5,5) & (0,0)\
\hline
\end{array}\end{array}$ Which of the following are secure strategies for players 1 and 2,respectively?
A) (high price, high price)
B) (high price, low price)
C) (low price, high price)
D) (low price, low price)

Quizplus · Accepted Answer

A secure strategy is one that guarantees a player a certain payoff, regardless of the actions of the other player. In this game, the only secure strategy for player 1 is to charge a high price, since this guarantees them a payoff of at least 5. The only secure strategy for player 2 is also to charge a high price, since this guarantees them a payoff of at least 10.

In the Game Depicted Below,firms 1 and 2 Must Independently