Papine Campus. The strategies are to "Enter" or "Don't Enter". If either firm plays Don't Enter, it earns 0 profits. If one firm plays Enter and the other plays Don't Enter, the Firm that plays Enter earns $300,000 per year in profits (Don't enter always yields 0 profits). If both firms choose to play Enter, both lose $100,000 per year as there is not enough demand for two restaurants to make positive profits. The payoff matrix below shows the payoffs for two restaurants BK Don't Enter 3,0 Enter Enter Don't Enter -1,-1 0,3 0,0 Payoffs are in units of $100,000 a. What are the Nash equilibria of this game? b. Is there a mixed strategy Nash equilibrium in game? If so, what is it? c. Calculate the expected Nash equilibrium payoff for KFC and BK respectively
Papine Campus. The strategies are to "Enter" or "Don't Enter". If either firm plays Don't Enter, it earns 0 profits. If one firm plays Enter and the other plays Don't Enter, the Firm that plays Enter earns $300,000 per year in profits (Don't enter always yields 0 profits). If both firms choose to play Enter, both lose $100,000 per year as there is not enough demand for two restaurants to make positive profits. The payoff matrix below shows the payoffs for two restaurants BK Don't Enter 3,0 Enter Enter Don't Enter -1,-1 0,3 0,0 Payoffs are in units of $100,000 a. What are the Nash equilibria of this game? b. Is there a mixed strategy Nash equilibrium in game? If so, what is it? c. Calculate the expected Nash equilibrium payoff for KFC and BK respectively
Principles of Economics (MindTap Course List)
8th Edition
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 5CQQ
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