MAT-Deliverable 3 Nash Equilibria Analysis

 Part1,2, and 3  APA format

A local law firm has hired G & B Consulting to help determine a business strategy. There is a competing firm in the area as well, and the first firm suspects that they are also reconsidering their business strategy by going to a different consulting firm. The choice that each firm is faced with is whether or not to lower their rates to attract more customers. If neither company changes prices, both firms continue to make a profit. If one prices low while the other does not, the firm that prices low will take all of the business. If both firms price low, they will continue to split the market, but at reduced profits. More specifically, if both firms price high, they each can expect yearly profits of $15 million. If Firm 1 prices high while Firm 2 prices low, Firm 1 should only expect profits of $5 million while Firm 2 should expect profits of $25 million. If they choose the reverse, the payoffs would be switched accordingly. If both firms choose to price low, they should both expect profits of $5 million.

Part 1:

Part 2: Your coworker who is also working on this project wants to advise the firm that they should price low no matter what, as it will give the chance of obtaining the highest profits. The two of you need to determine whose strategy is better and why before bringing your analysis to the client.

Part 3: