Find the solution to the following simultaneous pricing decision between Rattler

Question

Find the solution to the following simultaneous pricing decision between Rattler Enterprises and Sidewinder, Inc. 7. Sidewinder's price $200 $5,000, $3,600 $4,500, $4,200 $4,200, $4,500 $6,000, $7,000 $4,400, $5,000 $5,000, $4,600 $3,750, S3,200 $4,000, $4,200 $5,500, $3,600 S100 $300 $100 Rattler's$200 price $300 Annual payoffs in millions of dollars of proft (a) Rattler's dominant strategy is($100, $200, $300, or Rattler has no dominant strategy). (b) Sidewinder's dominant strategy is Sidewinder has no dominant strategy). has no dominant strategy)(5100, $200, $300, or (e) Rate' dominated strategy is(5100, 200, 5300 or Ratler has no dominated strategy) (d) Sidewinder's dominated strategy is(100, $200, $300, or Sidewinder has no dominated strategy). (e) The likely outcome of this simultancous pricing decision is for Rattler to seta price of S and Sidewinder to set a price ofExplain why you chose this pair of decisions.

Explanation / Answer

(a) Rattler has no dominant strategy.

(b) Sidewinder has no dominant strategy.

(c). Rattler has no dominated strategy.

(d). Sidewinder has no dominated strategy.

(e) Rattler to set a price of $200;

Sidewinder to set a price of $100 (cell D).

The pair of decisions in cell D is a Nash equilibrium pair of decisions. In cell D, Rattler is doing the best it can for itself given that it expects Sidewinder to set a price of $100. In cell D, Sidewinder is doing the best it can for itself given that it expects Rattler to set its price at $200. Cell D is, of course, strategically stable since neither firm can unilaterally change its decision and make higher profit

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