Figure: Payoff Matrix II for Blue Spring and Purple Rain Reference: __(Figure: P

Question

Figure: Payoff Matrix II for Blue Spring and Purple Rain Reference:

__(Figure: Payoff Matrix II for Blue Spring and Purple Rain) Examine the figure Payoff Matrix II for Blue Spring and Purple Rain. The figure refers to two producers of bottled water. Suppose Blue Spring charges a high price and Purple Rain does the same. In the next period, Blue Spring charges a low price and Purple Rain earns a loss. If Purple Rain responds with a tit-for-tat strategy, they will:

A) always charge a low price—the same as its dominant strategy.

B) make random changes in its price so that Blue Spring is left with no systematic strategy.

C) charge a low price in the next period and thereafter charge the same price that Blue Spring charged in the previous period.

D) always charge a high price.

Explanation / Answer

A Dominant methodology is one which a firm picks independent of which system the other firm picks.

At the point when Blue keeps high Price, Purple procures most noteworthy result when it keeps Low Price ($50,000 > $20,000).

At the point when Blue keeps low Price, Purple gains most elevated result when it keeps high Price ($12,000 > $10,000).

Along these lines, Purple does not have a dominant methodology.

Related Questions

Navigate

• Browse (All)
• Browse F
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.