This preview has intentionally blurred sections. Sign up to view the full version.View Full Document
Unformatted text preview: Dominant/Fringe Firm Standard Bertrand game Homogenous goods Single-shot, simultaneous game P=100-Q, MC 1 =MC 2 =10 Capacity 1 =1000, Capacity 2 =5 Is there a Nash Equilibrium? 3 Cornel University Prisoner’s Dilemma in Pricing: Pepsi vs. Coke Coke makes very high profit; Pepsi makes very low profit Both receive low profit Pepsi makes very high profit; Coke makes very low profit Both receive high profit Coke’s Actions Pepsi’s Actions Price High Price Low Price Low Price High Cornel University Prisoner’s Dilemma in Advertising: Phillip Morris vs. RJR RJR makes very high profit; P-M makes very low profit Both receive low profit P-M makes very high profits; RJR makes very low profit Both receive high profit RJR’s Actions Phillip Morris’ Actions Advertise Lightly Advertise Heavily Advertise Lightly Advertise Heavily...
View Full Document
- Fall '07
- Game Theory, Cornell University, Willy Chucky, Fight Willy Stay