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Economics, Game Theory, One Shot Game
1. Given the information in Exhibits 1, 2, and 3, would you predict that Sony and/or Microsoft will want to reduce console prices by $100?
Assume Nintendo monitors its competitors’ actions but has no plans to change its price. Use the framework for a one-shot simultaneous game to analyze this strategic interaction. Present your results in “normal form” (indicate the players, their possible strategies, and the payoffs resulting from alternative strategies) and explain why this is the most likely outcome of this game.
2. Based on the material discussed in class, under which circumstances and assumptions
would the “high price, high price” be a possible equilibrium in this game?
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