In a simultaneous pricing game there are two operators. If one of them prices low, he...

In a simultaneous pricing game there are two operators. If one of them prices low, he gets all the customers, a payoff of 12, while other gets zero. If both price high they each get a payoff of 6 and if both price low, they get a payoff of 5.
What is the best response of Operator 2 to Operator 1 pricing high?

Select one:

a. Leave the market

b. Also price high

c. Price low

d. Price at the same level

Solutions

Expert Solution

option D is correct

Considering the pricing game of the operators,if operator 1 prices high the best response by Operator 2 would be, to price at same level as both would get a payoff of 6 which is suitable for both the operators and pricing low would result in high pay off despite getting all the customers

Rahul Sunny answered 2 years ago

Next > < Previous

Related Solutions

Prove that for a wave function to be a simultaneous eigenfunction of two operators A and...

Prove that for a wave function to be a simultaneous eigenfunction of two operators A and C, the operators must commute.

Consider the hypothetical example using game theory. Assume that it is a one-off simultaneous move game,...

Consider the hypothetical example using game theory. Assume that it is a one-off simultaneous move game, and that each player only cares about their own payoff. LG and Samsung are deciding whether or not to release a new 360-degree camera. If both LG and Samsung release the camera, then LG will make $20 million profit, and Samsung will make $40 million profit. If LG releases the camera, and Samsung does not, then LG will make $30 million profit and Samsung...

Suppose you are given the following one-shot, simultaneous-move game: &nbsp

Suppose you are given the following one-shot, simultaneous-move game: BP and Exxon are deciding whether or not to charge a high price or a low price for gasoline sales tomorrow. The two firms cannot collude, and both will post their prices tomorrow at the same time. This game has the following payoff matrix (profits for the day are in parentheses): Exxon High Price Low Price High Price ($800, $800) (-$300, $1,200) Low Price ($1,200, -$300) ($500,...

In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If...

In a two-player, one-shot simultaneous-move game each player can choose strategy A or strategy B. If both players choose strategy A, each earns a payoff of $17. If both players choose strategy B, each earns a payoff of $27. If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $62 and player 2 earns $11. If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $11 and player...

Below is the pay-off matrix for a one-shot, simultaneous move game with two players/firms, Firm 1...

Below is the pay-off matrix for a one-shot, simultaneous move game with two players/firms, Firm 1 and Firm 2. They are both in the apple market. Each can chose to go for the high end of the market (high quality) or the low end of the market (low quality). The payoffs are profits in thousands of dollars. Each firm has two strategies: low and high. Firm2 Low High Low -$20, -$30 $100,$800 Firm High $900,$600 $50,$50 Using the above...

Four firms (A, B, C, and D) play a simultaneous-move pricing game. Each firm (i) may...

Four firms (A, B, C, and D) play a simultaneous-move pricing game. Each firm (i) may choose any price Pi ∈ [0, ∞) with the goal of maximizing its own profit. (Firms do not care directly about their own quantity or others’ profits.) Firms A and B have MC = 10, while firms C and D have MC = 20. The firms serve a market with the demand curve Q = 100 – P. All firms produce exactly the same...

2. In a two-player, one-shot, simultaneous-move game, each player can choose strategy A or strategy B....

2. In a two-player, one-shot, simultaneous-move game, each player can choose strategy A or strategy B. If both players choose strategy A, each earns a payoff of $400. If both players choose strategy B, each earns a payoff of $200. If player 1 chooses strategy A and player 2 chooses strategy B, then player 1 earns $100 and player 2 earns $600. If player 1 chooses strategy B and player 2 chooses strategy A, then player 1 earns $600 and...

Can there be more than one equilibria in a simultaneous game? Explain and/or give na example...

Can there be more than one equilibria in a simultaneous game? Explain and/or give na example of why or why not?

If two operators do not commute, show that we cannot simultaneously diagonalise them .

The following payoff matrix represents a single-period, simultaneous move game to be played by two firms....

The following payoff matrix represents a single-period, simultaneous move game to be played by two firms. Show all the best responses for each player by placing checkmarks next to each payoff that reflects a best response choice. Does Firm A have a dominant strategy and if so, what is it? Does Firm B have a dominant strategy and if so, what is it? Does a Nash Equilibrium (or multiple NE) exist for this game and if so, what is it...

Subjects