Chapter 26, Problem 17P

To determine

The pricing decision of the firms in a changed situation.

Concept Introduction:

Game Theory: It is a theory of strategy and decisions making related to cooperation and conflict in a competitive environment in which the participants share a set of regulations and the possible outcomes.

Dominant Strategy: A dominant strategy in the game theory is the strategy that will certainly have the desired effects, without being affected by the strategy of the opponents. It is a set of choices and options that leads to the best balance of risk and reward ratios.

Pay-off Matrix: A pay-off matrix, in the context of game theory, is a tool used to simplify all the possible outcomes of a strategic decision. It is a visual representation of all the possible strategies and all the possible outcomes.