-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.Both firms setting a high price is not a Nash equilibrium because
A) setting a high price is the dominant strategy for each firm.
B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price.
C) there is no dominant strategy for either firm.
D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price.

Question

-The above figure shows a payoff matrix for two firms,A and B,that must choose between a high-price strategy and a low-price strategy.Both firms setting a high price is not a Nash equilibrium because
A) setting a high price is the dominant strategy for each firm. 
B) neither firm can improve its payoff by setting a low price given that the other firm is setting a high price. 
C) there is no dominant strategy for either firm. 
D) both firms can improve their payoff by setting a low price given that the other firm is setting a high price.

Quizplus · Accepted Answer

Both firms can improve their payoff by setting a low price given that the other firm is setting a high price, indicating that both firms setting a high price is not a Nash equilibrium because each firm has an incentive to deviate to achieve a better outcome.

-The Above Figure Shows a Payoff Matrix for Two Firms,A