Consider the following game: Joanna has a credit card account with Capital One. Capital One’s available strategies are to raise Joanna’s credit card interest rate or do nothing. Joanna’s available strategies are to transfer her Capital One credit card balance to another credit card company or do nothing. If Capital One raises Joanna’s interest rate and Joanna does nothing, Capital One increases profits by $1,000 while Joanna receives -$1,000. If Capital One raises Joanna’s interest rate and Joanna transfers her account to another credit card company, Capital One receives -$300 while Joanna receives -$100. If Capital One does nothing and Joanna does nothing, each receives $0. If Capital One does nothing and Joanna transfers her account to another credit card company, Capital One receives -$300 and Joanna receives -$150.
Draw a game tree similar to the one on slide #7 in the Game Theory and Oligopoly PPT. Be sure to specify the action and the payoffs for each player.
Identify the Nash Equilibrium of this game.