Essay
Assume that two gyro restaurants, Alpha and Beta, are competing for customers and if they both offer a student discount, they would each earn $60,000 in profits.If neither offers a student discount, they each earn $100,000 in profits.If one offers a student discount and the other doesn't, the restaurant that offers the discount earns $80,000 in profit while the other earns $40,000 in profit.
a.Present the information above in the form of a payoff matrix.Let Beta be the row player and Alpha the column player.
b.Does each firm have a dominant strategy and if so what is it?
c.What is the Nash equilibrium?
Correct Answer:
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a.See the table below.
b.No, there is...View Answer
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Correct Answer:
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b.No, there is...
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