Question 5 1 Use following information for questions 5-6. Consider the department store market in Sydney. Two players, David Jones and MYER, are deciding the prices for their new seasonal collection. They could choose either high or low pricing strategy. The payoffs are given by the following table. The first payoff is for David Jones MYER Low High David Jones Low 6,6 7,4 High 4,8 8.9 If David Jones and MYER decide simultaneously, which of the following is true? There is a unique Nash equilibrium. There is no Nash equilibrium. Both shops have a dominant strategy to high pricing strategy. There are two Nash equilibria in this game. None of the other answers is correct. Question 6 1 After David Jones has already printed their catalogue and committed to its price, MYER observes its rival's choice and makes its own decision to price Low or High, which one is subgame perfect equilibrium? I. (High; High if High) II. (High; High if High and Low if Low) III. (Low, Low if Low and High if High) IV/(Low: High if Low) Only II Only I Only I and II There are no subgame perfect equilibria in this game Only III and IV
