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Respond to the question: Payoff Matrix?

 04/29/2001 11:25 AM by Rodrigo; payoff matrix
Yes, it seems to be a simultaneous game. You have two players: A and B. Each player has two actions: R (reduce price) and S (same price). Write a 2x2 matrix, where rows represent A's actions and columns represent B's actions. The

 04/29/2001 06:25 AM by Brandon;
Hi! I'll try and guide you here if I can.... From your question, it isn't clear if it's a sequential game or a simultaneous game. You've 2 players and 2 strategies (reduce price; don't reduce price). This is if it's a simultaneous [View full text and thread]

 04/29/2001 06:25 AM by Brandon;
Hi! I'll try and guide you here if I can....

From your question, it isn't clear if it's a sequential game or a simultaneous game. You've 2 players and 2 strategies (reduce price; don't reduce price). This is if it's a simultaneous game. If it's a sequential game where one firm can observe the action of the other firm, you'll have one firm with 4 pairs of strategies (reduce, stay; stay, reduce;reduce reduce;stay, stay)

Now have each player noted as a row or a column player with their respective strategies and you're just about to get started with the matrix.
Now if firm A cuts price and firm B follows, you should get a payoff of (10,10). Fill in the payoff for the rest.

Once you've the payoff matrix ready, it's not difficult to get the NE (if any) :)

Good luck! :)

p/s: an alternative is to start with part (d) 1st and eliminate the dominated strategy so that you'll have a smaller matrix to work with to find NE [Manage messages]

 04/29/2001 04:41 AM by name withheld; Payoff Matrix
This is probably a very elementary question regarding economics but I am taking an internet class and just cannot comprehend this chapter. Here are the questions that I am trying to answer. I am not asking for an answer. I am looking [View full text and thread]