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    Case study in Game Theory: newspaper pricing

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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.

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    Solution Summary

    This solution demonstrates all important aspects of game theory in the context of a case study involving the Tampa Tribune and St. Petersburg Times. Topics covered include:
    - Dominant strategy
    - Dominated strategy
    - Solving a payoff matrix
    - Nash equilibrium
    - Strategic stability
    - Incentives
    - Prisoners Dilemma