Suppose that Lion and Tiger stop advertising but must determine the price they will charge for each pizza sold. Lion believes that Tiger’s price can be $6 (with 25% chance), $8 (with 50% chance) or $10 (with 25% chance). If Lion charges a price x, and Tiger charges a price y, Lion will sell 100 +25(y-x) pizzas. It costs Lion $4 to make a pizza. Lion is considering charging $5, $6, $7, $8, or $9 for a pizza.
a) Construct Lion’s profit decision matrix depending on own possible prices, respectively Tiger’s possible prices.