Use the following case from question
Two ice cream trucks A&B are playing a simultaneous pricing game.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.
-Does the Nash equilibrium yield maximum profit?
A)Yes,because they are each getting the maximum payoff
B)No,because they could do better by pricing high
C)Yes,because they are both making sales
D)No,because they both hate selling ice cream

Question

​Use the following case from question
Two ice cream trucks A&B are playing a simultaneous pricing game.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.
-​Does the Nash equilibrium yield maximum profit?
A)​Yes,because they are each getting the maximum payoff
B)No,because they could do better by pricing high
C)Yes,because they are both making sales
D)​No,because they both hate selling ice cream

Quizplus · Accepted Answer

The Nash equilibrium in this game is for both players to price low, resulting in a payoff of 5 each. However, if both players agreed to price high, they would each earn a payoff of 6. Therefore, they could do better by jointly deviating from the Nash equilibrium, making choice B the best option.

​Use the Following Case from Question

Use the Following Case from Question