Consider the following information for a simultaneous-move game: two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the profits of both stores with and without advertising. Payoffs for Megastore are in bold. A Nash Equilibrium Superstore Advertise Don't Advertise Megastore Advertise $95, $80 $305, $55 Don't Advertise $65, $285 $165, $115 A Nash equilibrium for the Megastore to advertise and for the Superstore to advertise for the Megastore to advertise and for the Superstore not to advertise for the Megastore to not advertise and for the Superstore to advertise for the Megastore to not advertise and for the Superstore to not advertise
Consider the following information for a simultaneous-move game: two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the profits of both stores with and without advertising. Payoffs for Megastore are in bold. A Nash Equilibrium Superstore Advertise Don't Advertise Megastore Advertise $95, $80 $305, $55 Don't Advertise $65, $285 $165, $115 A Nash equilibrium for the Megastore to advertise and for the Superstore to advertise for the Megastore to advertise and for the Superstore not to advertise for the Megastore to not advertise and for the Superstore to advertise for the Megastore to not advertise and for the Superstore to not advertise
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Question
Consider the following information for a simultaneous-move game: two discount stores (megastore and superstore) are interested in expanding their market share through advertising. The table below depicts the profits of both stores with and without advertising. Payoffs for Megastore are in bold.
A Nash Equilibrium
| Superstore | |||
|---|---|---|---|
| Advertise | Don't Advertise | ||
| Megastore | Advertise | $95, $80 | $305, $55 |
| Don't Advertise | $65, $285 | $165, $115 |
A Nash equilibrium
for the Megastore to advertise and for the Superstore to advertise
for the Megastore to advertise and for the Superstore not to advertise
for the Megastore to not advertise and for the Superstore to advertise
for the Megastore to not advertise and for the Superstore to not advertise
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