Explore BrainMass
Share

Nash Equilibrium with AMD and Intel

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Below is a payoff matrix for Intel and AMD for PC microprocessors. The first number per cell is AMD's profit while the second is Intel's.
Intel
Lower Price Same Price Higher Price
AMD Lower Price -15,-15 2,6 15,-15
Same Price 6,4 7,20 5,-4
Higher Price -12,12 -3,25 16,30
a. Is there a Nash Equilibrium? Why?
b. Is this an example of a prisoner's dilemma?

© BrainMass Inc. brainmass.com October 25, 2018, 9:37 am ad1c9bdddf
https://brainmass.com/economics/game-theory/nash-equilibrium-amd-intel-580819

Solution Preview

Part A
The action pair (Lower Price, Lower Price) is NOT a Nash equilibrium because (i) given that AMD chooses Lower Price, Intel is better off choosing Same Price (payoff 6).

The action pair (Lower Price, Same Price) is NOT a Nash equilibrium because (i) given that AMD chooses Lower Price, Intel is better off choosing Same Price (payoff 6) but (ii) given that Intel chooses Same Price, AMD is better off choosing Same Price (Payoff 7)

The action pair (Lower Price, Higher Price) is NOT a Nash equilibrium because (i) given that AMD chooses Lower Price, Intel is better off choosing Same Price (payoff 6).

The action pair (Same Price, Lower Price) is NOT a Nash equilibrium because (i) given that AMD chooses Same Price, Intel is better off choosing Same Price (payoff ...

Solution Summary

This solution shows in a stepwise manner how to identify a Nash Equilibrium and also determine if the Intel and AMD case is an example of the prisoner's dilemma.

$2.19
See Also This Related BrainMass Solution

Solution contains explanation of Nash Equilibrium in pure strategy, Prisoner's Dilemma and interrelation between both of them through an example.

Below is a payoff matrix for Intel and AMD. In each cell, the first number refers to AMD's profit, while the second is Intel's.
a. Is there a Nash Equilibrium(s)? Why or why not?
b. Is this an example of the Prisoner's Dilemma? Why or why not?

Intel
AMD Lower Price Same Price Higher Price
Lower Price -2, -6 6, -2 12,-15
Same Price 6,14 9, 8 15, 4
Higher Price -13,7 3, 9 16,20

View Full Posting Details