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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