1. Two Honolulu burger joints, Hamburger Heaven and Beach Burgers, are trying to

Question

1. Two Honolulu burger joints, Hamburger Heaven and Beach Burgers, are trying to decide whether to charge extra for cheese on their burgers. They must both order their menus today with no knowledge of the other restaurant's decision. The two restraunts do not cooperate. The relevant payoff matrix appears below and both restaurants know all of the information contained therein. Payoff are in terms of weekly profits.

Hamburger Heaven   

Cheese Extra Free Cheese

                Cheese Extra

Beach Burgers

Free Cheese

$1500; $1850

$1200; $1700

$1600; $1550

$1400; $1625

Question: In Nash Equillibrium, Beach Burgers' weekly profit is:

a. 1200

b. 1400

c. 1500

d. 1600

e. There is no nash equillibrium

                Cheese Extra

Beach Burgers

Free Cheese

$1500; $1850

$1200; $1700

$1600; $1550

$1400; $1625

Explanation / Answer

A Nash equilibrium is an action profile a with the property that no player i can do better by choosing an action different from ai , given that every other player j adheres to aj .

now as per the given defination the nash equilibrium is when both of the firm opts for free cheeze

so beach burger weekly profit is 1400

so answer is B

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