Consider the finite 2 player game, representing price competition in a market where al costumers buy...
Consider the finite 2 player game, representing price competition in a market where al costumers buy from the seller with the lowest price. Both sellers simultaneously choose price, p1 and p2, where pi is in P = {0,1,2,3,4}. The profits to each seller are given in the payoff bi-matrix below, where seller 1 chooses row and seller 2 column.
Firm 2
| p=0 | p=1 | p=2 | p=3 | p=4 | |
|---|---|---|---|---|---|
| p=0 | -5,-5 | -10,0 | -10,0 | -10,0 | -10,0 |
| p=1 | 0,-10 | 0,0 | 0,0 | 0,0 | 0,0 |
| p=2 | 0,-10 | 0,0 | 3,3 | 6,0 | 6,0 |
| p=3 | 0,-10 | 0,0 | 0,6 | 4,4 | 8,0 |
| p=4 | 0,-10 | 0,0 | 0,6 | 0,8 | 3,3 |
Firm 1
a.) Find and describe all strictly dominated pure strategies for Firm 1
b.) Find and describe all weakly dominated pure strategies for Firm 1
c.) Find and describe all pure strategy Nash equilibria
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Consider the finite 2 player game, representing price
competition in a market where al costumers buy...
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