[Solved] Cogswell’s Cogs and Spacely Sprockets are two companies selling identical models of XT computer chips

Cogswell’s Cogs and Spacely Sprockets are two companies selling identical models of XT computer chips used in the Xray Laser Stunner 2000 ray gun. The companies compete on a regular basis and have to set prices weekly to their competitors. Each company can adopt a high price or a low price each week. The payoff matrix of profits in thousands of space bucks is given in the table below. One day Mr. Cogswell says to his manager. “so if I lower my price next week, my profits will go up and Spacely’s will go down? That sounds like a pretty good deal, since I hate Spacely! His manager says that the temptation to cheat (lower price) is pretty high, but the benefit from cheating isn’t worth it unless you think the competition game is likely to end. Mr. Cogswell says. “well I know that Spacely is thinking about retiring. I think there is a 35% probability that Spacely quits.” Should Cogswell cheat and lower price? Show your work and explain your answer for full credit. Cogswell’s Cogs High Low High (20,20) (2,30) Low (30,2) (10,10) Spacely Sprockets

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Answer to Cogswell’s Cogs and Spacely Sprockets are two companies selling identical models of XT computer chips used in the Xray Laser Stunner 2000 ray gun…..