Nash Equilibrium in a Payoff Matrix
The payoff matrix below shows the profits, in millions of dollars, for two firms in an oligopolistic market. Based on the matrix, which of the following describes the Nash equilibrium outcome?
Firm B
Collude Betray
Firm A Collude (5,5) (0,10)
Betray (10,0) (1,1)
A
Both firms choose to Betray
B
Firm A Betrays while Firm B Colludes
C
There is no equilibrium
D
Both firms choose to Collude
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