Use the following to answer question
Consider the following information for a simultaneous move game: Two discount stores (megastore and superstore)are interested in expanding their market share through advertising.The table below depicts the strategic outcomes (profits)of both stores with and without advertising.

-The Nash equilibrium for the game is
A)For both stores to advertise
B)For megastore to advertise and for superstore not to advertise
C)For megastore not to advertise and for superstore to advertise
D)For both stores to not advertise

Question

​Use the following to answer question
Consider the following information for a simultaneous move game:  Two discount stores (megastore and superstore)are interested in expanding their market share through advertising.The table below depicts the strategic outcomes (profits)of both stores with and without advertising.
 
-​The Nash equilibrium for the game is
A)​For both stores to advertise 
B)For megastore to advertise and for superstore not to advertise 
C)For megastore not to advertise and for superstore to advertise 
D)​For both stores to not advertise

Quizplus · Accepted Answer

In a Nash equilibrium, each player's strategy is optimal given the other players' strategies. Without specific payoff matrices or further details about the game, the most common understanding of competitive advertising strategies suggests that both stores advertising is a Nash equilibrium, as neither store can benefit by unilaterally changing their strategy if the other store's strategy is fixed. This is because not advertising while the other does could lead to a significant loss in market share.

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Use the Following to Answer Question