Suppose that Walmart and Target are selling Sony flat-screen computer monitors for a price of $150 or $200 each. Based on the information in the payoff matrix, does a Nash equilibrium exist?

Respuesta :

Based on the information in the payoff matrix, a Nash equilibrium exists.

Nash equilibrium can be described as the choice market players would make in which they would have no incentive to change their decisions. It is the best outcome for each market player.

Looking at the payoff matrix, the payoff of charging $150 results in the higher profits for both Walmart and Target. Thus, the Nash equilibrium for both stores is to charge $150.

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