Hidden Valley has two nail salons, one owned by Pat and the other owned by Danny

Question

Hidden Valley has two nail salons, one owned by Pat and the other owned by Danny. Suppose that Pat and Danny have two strategies: collude, fix the monopoly price, and limit the number of manicures, or break the collusion, cut the price, and produce more manicures. The payoff matrix gives the economic profit in dollars for the game that Pat and Danny play. If this game is played just once, the Nash equilibrium is both Pat and Danny collude both Pat and Danny break the collusion Pat colludes and Danny breaks the collusion Pat breaks the collusion and Danny colludes

Explanation / Answer

Both will break the collusion as for them not colluding is more profitable than collusion

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