Use the Information in the Following Table, Which Summarizes the Payoffs

question 62

Essay

Use the information in the following table, which summarizes the payoffs i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:
Firm 2
$$\begin{array} { | c | l | c | c | } \hline & & \text { Average Quality } & \text { HighQuality } \\\hline \text { Firm 1 } & \text { AverngeQunlity } & 600,600 & 400,1100 \\\hline & \text { HighQuality } & 1100,400 & 900,900 \\\hline\end{array}$$ a. What is each player's dominant strategy? Explain your reasoning.
b. Referring to the table above, is this an example of a prisoner's dilemma game? Why or why not?
c. Is there a Nash equilibrium? If so, what is it?

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