wo garden centres, Grass and Shrubs, sell a similar range of plant pots, plants and plant food. Both are considering whether to discount or maintain their prices as spring approaches. Their payoffs under different combinations of decisions are given below: If Grass discounts and Shrubs does not, Grass receives a profit of $3500 per week and Shrubs receives a profit of $1000 per week. If Grass does not discount and Shrubs discounts, Grass receives a profit of $1000 per week and Shrubs receives a profit of $2700 per week. If both Grass and Shrubs discount, they will both receive profits of $1500 per week. If both Grass and Shrubs maintain their prices, they will both receive profits of $2000 per week. 1 Assuming both firms are rational and fully informed about the payoffs of the game, describe any dominant strategies they might have and justify your answer in full
wo garden centres, Grass and Shrubs, sell a similar range of plant pots, plants and plant food. Both are considering whether to discount or maintain their prices as spring approaches. Their payoffs under different combinations of decisions are given below: If Grass discounts and Shrubs does not, Grass receives a profit of $3500 per week and Shrubs receives a profit of $1000 per week. If Grass does not discount and Shrubs discounts, Grass receives a profit of $1000 per week and Shrubs receives a profit of $2700 per week. If both Grass and Shrubs discount, they will both receive profits of $1500 per week. If both Grass and Shrubs maintain their prices, they will both receive profits of $2000 per week.
1 Assuming both firms are rational and fully informed about the payoffs of the game, describe any dominant strategies they might have and justify your answer in full
Step by step
Solved in 5 steps
