Nash equilibrium: explained
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The following payoff matrix represents the long-run payoffs for two duopolists faced with the option of buying or leasing buildings to use for production. Determine whether any dominant strategies exist and whether or not there is a Nash equilibrium. In any case, what is the logical solution and why?
Firm 1
Lease Buy
Building Building
Lease F1 = 500 F1 = 750
Firm 2 F2 = 500 F2 = 400
Buy F1 = 300 F1 = 600
F2 = 600 F2 = 200
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Solution Summary
This solution determine whether any dominant strategies exist and whether or not there is a Nash equilibrium.
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As we can see that there is no dominant strategy exists between Firm 1 and Firm ...
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- MBA, Indian Institute of Finance
- Bsc, Madras University
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