# Nash Equilibrium with AMD and Intel

Not what you're looking for?

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?

##### Purchase this Solution

##### 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.

##### 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 ...

##### Purchase this Solution

##### Free BrainMass Quizzes

##### Economic Issues and Concepts

This quiz provides a review of the basic microeconomic concepts. Students can test their understanding of major economic issues.

##### Economics, Basic Concepts, Demand-Supply-Equilibrium

The quiz tests the basic concepts of demand, supply, and equilibrium in a free market.

##### Pricing Strategies

Discussion about various pricing techniques of profit-seeking firms.

##### Elementary Microeconomics

This quiz reviews the basic concept of supply and demand analysis.

##### Basics of Economics

Quiz will help you to review some basics of microeconomics and macroeconomics which are often not understood.