If Simple were able to move first in a sequential version of the game in Scenario 13.15, the equilibrium would be:

A) an $80 price for Simple and a $70 price for Boring.
B) an $80 price for Simple and a $25 price for Boring.
C) a $35 price for Simple and a $70 price for Boring.
D) a $35 price for Simple and a $25 price for Boring.
E) a mixed strategy equilibrium.

Question

Kaylee Utesch · Accepted Answer

Final Answer : B, Explanation :  If Simple moves first, it can set a high price of $80, anticipating that Boring will respond with a lower price of $25 to capture the market. This results in an equilibrium where Simple sets a high price and Boring undercuts to gain market share.

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