Two men\'s clothing stores that compete for most of the market in a small town i

Question

Two men's clothing stores that compete for most of the market in a small town in Ohio must choose their advertising levels simultaneously. T & Son and Mr. B's, shows the weekly profit outcomes for the various edvertising I Mr. B's advertising level High Low HighA $4,000, $4,000$3,000, $5,000 Arbuckle &Son; advertising level LowC $5,000, $3,000 $3,500, $3,500 Which of the following statements is NOT true for the advertising decision facing Arbuckle &Son; and Mr. B when both firms choose a high level of advertising, they are in Nash equilibrium. O When both firm choose a low level of advertising, they are in Nash equilibrium. O This is a prisoners' dilemma decision situation. O Cell's B and C are not strategically stable O A dominant strategy equilibrium exists for Arbuckle and M: B

Explanation / Answer

HIGH HIGH Is not a NE.

Since IF MR. B is playing high, A can gain more by paying low with a gain of 5000.

Similarily, If A is playing high, B can maximise by playing Low with a gain of 5000

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