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Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.

Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter10: Monopolistic Competition And Oligopoly
Section: Chapter Questions
Problem 12RQ: Does each individual in a prisoners dilemma benefit more from cooperation or from pursuing...
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Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.
Transcribed Image Text:Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.
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