Pizza Hut $1 mill $1 mill $70 / $125 Papa Johns$2 mill 85 / 12O $3 mill 80 / 100 $3 mill 55 / 120 65 / 105 60 / 90 $2 mill 65 / 130 70 / 110 75 / 95

Question 2 (Choices Involving Strategy): Suppose there are two competing Gyms in a local town. Each gym is individually owned and has three pricing levels to choose from: Low, Medium and High (PL,PM, and PH). Consider the table below as the outcomes for each combination of strategies (they are yearly profits in the thousands). Can you predict the outcome using ONLY iteratively dominated strategies? Why or why not? Find the Nash Equilibrium(a) using best responses. Is this the best outcome? Now, suppose that there was a sudden increase in the cost of equipment that meant the low price was no longer viable, and both choosing the medium price level meant only 50 (thousand) profit for each gym. Nothing else changes. What is the pure and mixed strategy Nash equilibrium of this new game? Gym 1 is on the left and Gym 2 is on the top. The first number inside every box is Gym 1's profit and the second (after the comma) is Gym 2's profit. (10 Marks) PL PMPH PL 125, 125 200, 75 375,50 PM 75, 250…

How does backward induction affect decision-making in multi-stage games with complete information, particularly in the context of strategic interactions between firms in an oligopolistic market?

Question 8: Consider the strategic game above. Which of the following is true? a. for Player 1, x1 is strictly dominated by a mixed strategy b. for Player 1,x2 is strictly dominated by a mixed strategy c. for Player 1, x3 is strictly dominated by a mixed strategy d. for Player 1, no action is strictly dominated by a mixed strategy