The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa
ID: 1215679 • Letter: T
Question
The Tampa Tribune and the St. Petersburg Times compete for readers in the Tampa Bay market for newspapers. Recently, both newspapers considered changing the prices they charge for their Sunday editions. Suppose they considered the following payoff table for making a simultaneous decision to charge either a low price of $0.50 or a high price of $1.00. Tampa’s profits are shown in bold. St. Petersburg’s profits are in regular type.
For questions 1 – 10, choose the correct answer to fill in the blanks. Use the suggested words in parentheses after each blank. Provide a short explanation (25-50 words) to defend each choice.
St. Petersburg Times
Low Price
High Price
Low price
A.
B.
$120,000
$54,000
Tampa Tribune
$100,000
$120,000
C.
D.
High Price
$90,000
$88,000
$54,000
$90,000
1.Tampa Tribune's dominant strategy is ____________ (low price, high price, it has no dominant strategy).
2.St. Petersburg Times' dominant strategy is ____________ (low price, high price, it has no dominant strategy).
3.Tampa Tribune's dominated strategy is ____________ (low price, high price, it has no dominant strategy).
4.St. Petersburg Times' dominated strategy is ____________ (low price, high price, it has no dominant strategy).
5.This newspaper pricing decision ________ (is, is not) a Prisoners' Dilemma.
6.Is there a Nash Equilibrium in this game? If so, which cell(s) is/are the Nash? Is/are the Nash Dominant Strategy Equilibrium?
7.Which cell(s) is/are strategically stable?
St. Petersburg Times
Low Price
High Price
Low price
A.
B.
$120,000
$54,000
Tampa Tribune
$100,000
$120,000
C.
D.
High Price
$90,000
$88,000
$54,000
$90,000
Explanation / Answer
1.Tampa Tribune's dominant strategy is it has no dominant strategy
beacuse if Tampa chooses low price , he will get higher return than choosing higher price, only if petersburg chooses low price. but if petersburg chooses high price, than Tampa would be worse off with low price, choosing higher price would have been a better for him. so no dominant strategy
2. St. Petersburg Times' dominant strategy is higher price
beacuse whatever chioce Tampa will made, petersburg will be better off choosing higher price as compared to lower price
question 3 and 4 are same as 1 and 2 respectively so same answer, may be some typing errror
5. 5.This newspaper pricing decision is not a Prisoners' Dilemma.
In the prisoner’s dilemma, there is one dominant strategy equilibrium. here there is no dominant strategy
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