-Refer to the noncooperative, one-time, static game depicted in Figure 2.12. Rah-Rah and 7th Heaven are convenience store chains that are considering opening a franchise in downtown Pawtucket, or just off Interstate 95. Monthly payoffs are in thousands of dollars. If both stores adopt a secure strategy, what is the equilibrium strategy profile for this game?
A) {Pawtucket, Interstate}
B) {Interstate, Pawtucket}
C) {Pawtucket, Pawtucket}
D) {Interstate, Interstate}

Question

-Refer to the noncooperative, one-time, static game depicted in Figure 2.12. Rah-Rah and 7th Heaven are convenience store chains that are considering opening a franchise in downtown Pawtucket, or just off Interstate 95. Monthly payoffs are in thousands of dollars. If both stores adopt a secure strategy, what is the equilibrium strategy profile for this game?
A) {Pawtucket, Interstate} 
B) {Interstate, Pawtucket} 
C) {Pawtucket, Pawtucket} 
D) {Interstate, Interstate}

Quizplus · Accepted Answer

The equilibrium strategy profile is (Pawtucket, Pawtucket) because both stores will choose the strategy that maximizes their payoff, given the strategy of the other store. In this case, both stores will choose to open a franchise in Pawtucket because it gives them the highest payoff.

-Refer to the Noncooperative, One-Time, Static Game Depicted in Figure