Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate wa

Question

Dr. Fine and Dr. Feelgood are the only two medical doctors offering immediate walk-in medical services in the town of Springfield. That is, they operate in a duopoly. Each doctor can charge either a high price or a low price for a standard medical visit. The accompanying matrix shows their payoffs, in profits per patient (in dollars), for any choice that the two doctors can make.<?xml:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />

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Explanation / Answer

Well, I can't see your pay-off matrix, but probably your answer is that they both have a dominant strategy to choose low, so the nash equilibrium will be at (low, low). Start with Dr. Fine, given that he doesn't know what Dr. Feelgood will do, does he prefer his payoffs if at high or low? If Dr. Fine chooses a high price, he will want to charge a low price. If Dr. Fine chooses a low price, he will want to charge a low price. Verify that this is true for each player. I think that this will be the case because that is the standard game theory result.

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