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If American and United were playing a one-shot, simultaneous game what would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer). Both American and United charge a high price United charges a high price and American charges a low price Both American and United charge a low price American charges a high price and United charges a low price Suppose that United and American were going to play this game as a repeated game that lasted for two periods. What outcome would occur in the 2nd period? O American charges a high price and United charges a low price O Both American and United charge a low price O United charges a high price and American charges a low price O Both American and United charge a high price What would the Nash equilibrium (equilibria) be for this game? Select all that apply, (Hint: Use the checkmark method to help determine your answer.) Both American and United charge low prices in every period Both American and United charge high prices in every period United charges high prices in every period, and United charges low prices in every period American charges high prices in every period, and United charges low prices in every period

If American and United were playing a one-shot, simultaneous game what would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer). Both American and United charge a high price United charges a high price and American charges a low price Both American and United charge a low price American charges a high price and United charges a low price Suppose that United and American were going to play this game as a repeated game that lasted for two periods. What outcome would occur in the 2nd period? O American charges a high price and United charges a low price O Both American and United charge a low price O United charges a high price and American charges a low price O Both American and United charge a high price What would the Nash equilibrium (equilibria) be for this game? Select all that apply, (Hint: Use the checkmark method to help determine your answer.) Both American and United charge low prices in every period Both American and United charge high prices in every period United charges high prices in every period, and United charges low prices in every period American charges high prices in every period, and United charges low prices in every period

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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If American and United were playing a one-shot, simultaneous game what would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer). Both American and United charge a high price United charges a high price and American charges a low price Both American and United charge a low price American charges a high price and United charges a low price Suppose that United and American were going to play this game as a repeated game that lasted for two periods. What outcome would occur in the 2nd period? American charges a high price and United charges a low price Both American and United charge a low price United charges a high price and American charges a low price Both American and United charge a high price What would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer.) Both American and United charge low prices in every period Both American and United charge high prices in every period United charges high prices in every period, and United charges low prices in every period American charges high prices in every period, and United charges low prices in every period
Transcribed Image Text:If American and United were playing a one-shot, simultaneous game what would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer). Both American and United charge a high price United charges a high price and American charges a low price Both American and United charge a low price American charges a high price and United charges a low price Suppose that United and American were going to play this game as a repeated game that lasted for two periods. What outcome would occur in the 2nd period? American charges a high price and United charges a low price Both American and United charge a low price United charges a high price and American charges a low price Both American and United charge a high price What would the Nash equilibrium (equilibria) be for this game? Select all that apply. (Hint: Use the checkmark method to help determine your answer.) Both American and United charge low prices in every period Both American and United charge high prices in every period United charges high prices in every period, and United charges low prices in every period American charges high prices in every period, and United charges low prices in every period
According to a 2015 article in the New York Times, the airline industry in the United States was expected to achieve a record $30 billion in profit in 2015. The profits were due, in part, to the major airlines ability to restrict capacity which allowed them to charge higher prices. Such a strategy requires discipline on the part of the airlines to maintain the restricted capacity and avoid the temptation to lower their prices in an attempt at stealing customers from their rivals. Consider a simplified example where there are two airlines, American and United, and each airline can choose to restrict capacity and charge a high price or expand capacity and charge a low price. If one of the two airlines expands capacity and reduces the price and the other does not, the airline that reduces price will be able to capture customers from the other airline. The economic profits (in billions of dollars) for each outcome are illustrated in the following payoff table: American High Price Low Price United High Price American receives $20 profit United receives $15 profit American receives $25 profit United receives -$5 profit Low Price American receives -$5 profit United receives $20 profit American receives $0 profit United receives $0 profit
Transcribed Image Text:According to a 2015 article in the New York Times, the airline industry in the United States was expected to achieve a record $30 billion in profit in 2015. The profits were due, in part, to the major airlines ability to restrict capacity which allowed them to charge higher prices. Such a strategy requires discipline on the part of the airlines to maintain the restricted capacity and avoid the temptation to lower their prices in an attempt at stealing customers from their rivals. Consider a simplified example where there are two airlines, American and United, and each airline can choose to restrict capacity and charge a high price or expand capacity and charge a low price. If one of the two airlines expands capacity and reduces the price and the other does not, the airline that reduces price will be able to capture customers from the other airline. The economic profits (in billions of dollars) for each outcome are illustrated in the following payoff table: American High Price Low Price United High Price American receives $20 profit United receives $15 profit American receives $25 profit United receives -$5 profit Low Price American receives -$5 profit United receives $20 profit American receives $0 profit United receives $0 profit
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