Two competing firms, Firm A and Firm B, must simultaneously decide whether to set a 'High Price' or a 'Low Price' for their identical products. The table below shows the daily profits for each firm based on their decisions, with Firm A's profit listed first in each pair. In the standard terminology for this type of strategic interaction, which action represents 'Defecting'?
| Firm B: High Price | Firm B: Low Price | |
|---|---|---|
| Firm A: High Price | ($500, $500) | ($100, $700) |
| Firm A: Low Price | ($700, $100) | ($200, $200) |
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Two competing firms, Firm A and Firm B, must simultaneously decide whether to set a 'High Price' or a 'Low Price' for their identical products. The table below shows the daily profits for each firm based on their decisions, with Firm A's profit listed first in each pair. In the standard terminology for this type of strategic interaction, which action represents 'Defecting'?
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Two competing firms, Firm A and Firm B, must simultaneously decide whether to set a 'High Price' or a 'Low Price' for their identical products. The table below shows the daily profits for each firm based on their decisions, with Firm A's profit listed first in each pair.
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