Pricing problem Firm 2 Low Price High Price Low Price 10,10 100,-50 Firm 1 High Price -50,100 50.50
Pricing Problem Firm 1 Low Price High Price Low Price High Price Firm 2 10, 10 100, -50 -50, 100 50, 50
Finding best responses Firm 2 Low Price High Price Low Price 10,10 100,-50 Firm 1 High Price -50,100 50.50 Best response of a player i for a given action of the other player(s) Action that maximizes i's payoff (or minimizes his loss
Finding Best Responses Firm 1 Low Price High Price Low Price High Price Firm 2 10, 10 100, -50 -50, 100 50, 50 Best response of a player i for a given action of the other player(s): Action that maximizes i's payoff (or minimizes his loss)