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

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

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