The following provides information for a one-shot game. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Firm B}\
\text { Firm A}
\begin{array}{|l|l|l|}
\hline &\text { Low Price } & \text { High Price }\
\hline & & \
\text { Low Price } & (2,2) & (10,-8)\
\hline & & \
\text { High Price } & (-8,10) & (15,15)\
\hline
\end{array}\end{array}$ What are the Nash equilibrium strategies for this game?
A) (low price, low price)
B) (high price, high price)
C) (low price, low price) and (high price, high price)
D) None of the preceding answers is correct.

Question

The following provides information for a one-shot game. $\begin{array}{l}
\quad\quad\quad\quad\quad\quad\text { Firm B}\
\text { Firm A}
\begin{array}{|l|l|l|} 
\hline &\text { Low Price } & \text { High Price }\
\hline & & \
\text { Low Price } & (2,2) & (10,-8)\
\hline & & \
\text { High Price } & (-8,10) & (15,15)\
\hline
\end{array}\end{array}$ What are the Nash equilibrium strategies for this game?
A) (low price, low price)
B) (high price, high price)
C) (low price, low price) and (high price, high price)
D) None of the preceding answers is correct.

Quizplus · Accepted Answer

The Nash equilibrium is where neither player has an incentive to deviate from their strategy given the other player's strategy. In this game, both players are better off if they both choose low price rather than high price regardless of the other player's strategy. Therefore, (low price, low price) is a Nash equilibrium. However, if one player chooses high price, the other player's best response is also to choose high price, as it yields a higher payoff. Therefore, (high price, high price) is also a Nash equilibrium. As a result, the correct answer is C.

The Following Provides Information for a One-Shot Game What Are the Nash Equilibrium Strategies for This Game? A)

The Following Provides Information for a One-Shot Game What Are the Nash Equilibrium Strategies for This Game?
A)