Economics 2.2

Use the information in the following table, which summarizes the payoffs (i.e., profit) to two firms that must decide between an average-quality and a high quality product, to answer the questions that follow:

		Firm 2
		Average Quality	High Quality
Firm 1	Average Quality	600, 600	400, 1100
	High Quality	1100, 400	900, 900

What is the Nash equilibrium strategy in this game? Is this an example of a prisoner’s dilemma game? Why or why not?

 

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