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Advertise Don’t
advertise
Advertise (4, 3) (5, 1)
Firm A
Don’t (2, 5) (3, 2)
advertise
The Nash equilibrium
• Not all games have a dominant strategy
for each player.
advertise don’t
(4, 3) (5, 1)
advertise
Firm A (2, 5) (6, 2)
don’t
The prisoner’s Dilemma
Individual B
Confess don’t
confess
(10, 0) (1,1)
Don’t
confess
Price competition and the
prisoner’s dilemma
Firm B
High price
In-class problems
• Problem #5 page 426
• Problem #8 page 426