Consider the Following Payoff Matrix for a Game in Which

question 81

Multiple Choice

Consider the following payoff matrix for a game in which two firms attempt to collude under the Bertrand model: Here,the possible options are to retain the collusive price (collude) or to lower the price in attempt to increase the firm's market share (cut) .The payoffs are stated in terms of millions of dollars of profits earned per year.What is the Nash equilibrium for this game?

• A)Both firms cut prices.
• B)Both firms collude.
• C)There are two Nash equilibria: A cuts and B colludes,and A colludes and B cuts.
• D)There are no Nash equilibria in this game.

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Definitions:

Private Sector

The part of the economy that is not state-controlled and is run by individuals and companies for profit.

Ad Hoc Relationships

Temporary and specific relationships formed for a particular task or purpose, without a long-term commitment.

Collaboration

The act of working jointly with others, especially in a joint intellectual effort, to achieve a common goal or produce a shared outcome.

Collective Impact

A collaborative effort by various stakeholders (government, nonprofits, businesses) to address complex social problems through agreed upon strategies, shared measurements, and continuous communication.