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# Game Theory for Payoff Tables

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The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of \$0.50 or a high price of \$1.00.

For questions 1 - 10, provide the correct answer to fill in the blanks. Use the suggested words in parentheses after each blank.

St. Petersburg Times
Low Price
\$0.50 High Price
\$1.00
Tampa Tribune Low Price
\$0.50 A.
\$45,000,\$30,000 B.
\$35,000,\$20,000
High Price
\$1.00 C.
\$40,000,\$45,000 D.
\$50,000,\$40,000
Payoffs in dollars of profit per Sunday edition.

1.
Value:
10.00 points
St. Petersburg Times' dominant strategy is ____________ (low price, high price, it has no dominant strategy).

2.
Value:
10.00 points
Tampa Tribune's dominant strategy is ____________ (low price, high price, it has no dominant strategy).

3.
Value:
10.00 points
St. Petersburg Times' dominated strategy is ____________ (low price, high price, it has no dominated strategy).

4.
Value:
10.00 points
Tampa Tribune's dominated strategy is ____________ (low price, high price, it has no dominated strategy).

5.
Value:
10.00 points
Cell _____ (A, B, C, D) is a Nash equilibrium.

6.
Value:
10.00 points
The Nash equilibrium cell in question 5 _______ (is, is not) a dominant strategy equilibrium.

7.
Value:
10.00 points
Cell A ________ (is, is not) strategically stable.

8.
Value:
10.00 points
Cell B ________ (is, is not) strategically stable.

9.
Value:
10.00 points
Cell D ________ (is, is not) strategically stable.

10.
Value:
10.00 points
This newspaper pricing decision ________ (is, is not) a Prisoners' Dilemma.