If the game is repeated indefinitely, and the vendors adopt a trigger strategy such that they would start charging the low price only if the other vendor charged a low price last time, what would be the Nash equilibrium?
a. Both the vendors price high
b. Both the vendors price low
c. Vendor A prices high, vendor B prices low
d. Vendor B prices high, vendor A prices low
a
You might also like to view...
Which of the following is part of M2?
A) checks B) credit cards C) currency held inside a bank D) none of these are part of M1 or M2
Is relative PPP a useful equilibrium concept for describing general trends in exchange rates? Under what kinds of circumstances would the concepts of PPP be best applied?
What will be an ideal response?
The subprime financial crisis caused a recession because of the ________ in adverse selection and moral hazard problems and the ________ in housing prices
A) increase; increase B) increase; decrease C) decrease; increase D) decrease; decrease
When one player has to make a decision before the other player, the situation is called a:
A. simultaneous game. B. sequential game. C. prisoner's dilemma. D. commitment game.