his Question: 7 pts 19 of 20 (13 complete) This Test: 120 BigBox and CheapStore
ID: 1119786 • Letter: H
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his Question: 7 pts 19 of 20 (13 complete) This Test: 120 BigBox and CheapStore are the only two firms in a market. Each firm must decide whether to price high or price low. The payoffs from each strategy combination are shown to the right-in millions of dollars. The first number in each pair is BigBox's profit, the second is CheapStore's profit. Price High-Cheap StorePrice Low Suppose that this is a repeated game; that is, the two firms must set prices month, and thus they are interested in maximizing profits over time. $1000 $1500 If last month, BigBox set a high price, this month, CheapStore should set a $1000 $50 This is called O A. information products. O B. a tit-for-tat strategy 0 C. opportunistic behavior. O D. a prisoners' dilemma. $200 $1500 $200 tudy cation Tools>Explanation / Answer
1. Low price (since 1500 > 1000)
2. Tit for tat
(Reason: Since Cheapstore is deciding its strategy based on what Big Box played last)
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