Price war. A small town on a major highway has only two service stations: statio

Question

Price war. A small town on a major highway has only two service stations: station C, R, a major brand station, and station C, and independent. A market research firm provided the payoff matrix , where each entry indicates the percentage of customers who go to station R for the indicated prices per gallon of unleaded gasoline.
Station C
$1.78 $1.56
Station R $1.61 52% 54% $1.76 83% 84%
What is /are the saddle values? 54%, 84%, 83%, or 52%
What is the optimal strategy for Station R? $1.61, or $1.76
What is the optimal strategy for Station C? $1.78, or $1.56

Explanation / Answer

saddle values 84% optimal strategy for Station R is $1.76 optimal strategy for Station C is $1.56

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