For the situation, identify the two players and their possible choices, and cons

Question

For the situation, identify the two players and their possible choices, and construct a payoff matrix for their conflict. Andersonville has two gas stations, Ralph's Qwik-Serv and Charlie's Gas-n-Go. Both Ralph and Charlie are considering raising prices by 1A, staying with their current prices, or lowering prices by 1A. If they both make the same choice, there will be no change in their market shares, but if they make different choices, the one with the lower price will gain 4% of the market for each penny difference in their prices.

Explanation / Answer

                                        Charlie

R S L R 50/50 46/54 42/58 S 54/46 50/50 46/54 L 58/42 54/46 50/50

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