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Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.

Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter13: best-practice Tactics: Game Theory
Section: Chapter Questions
Problem 5E
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Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.
Transcribed Image Text:Firm B Provide loyalty Do not provide discount loyalty discount Provide loyalty discount 20, 15 40, 16 Firm A Do not provide 25, 20 30, 14 loyalty discount Suppose two firms are deciding whether or not to provide a loyalty discount for their products (e.g. after five purchases, the sixth purchase is free). The expected payoffs, in thousands, are as per the payoff matrix above. Based on the payoff matrix above, which of the following is correct? Neither firm has a dominant strategy in this game. None of the options is correct. Firm A has a dominant strategy, but firm B does not have a dominant strategy. Firm B has a dominant strategy, but firm A does not have a dominant strategy. Both firms have a dominant strategy in this game.
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