The choice is to cut fares by 25% or leave fares alone.

- If both airlines cut fares, each airline's profit = $200 million
- If neither airline cuts fares, each airline's profit = $300 million
- If only one airline cuts its fares, its profit = $500 million

the other airline' profits = $100 million

Questions: Draw the payoff matrix and find the Nash equilibrium.

Nash equilibrium: cut both firms fares

Date of last modification: 2019