Scenario
Two corporations should simultaneously elect a technology to use for his or her compatible merchandise. If the corporations adopt totally different standards, few sales result. a {standard|a typical} standard ends up in higher sales. One technology is considerably most well-liked by customers over the opposite. Thus, if the businesses will standardize on the well-liked technology, every obtains maximal profits. this can be conjointly referred to as a Pareto coordination game.
Description
There are 2 pure strategy equilibria. each corporations like identical equilibrium that Pareto dominates the opposite. A mixed strategy equilibrium conjointly exists.
Example
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Firm 2
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good
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bad
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Firm 1
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good
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5,5
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0,0
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bad
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0,0
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3,3
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General Form
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Player 2
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L
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R
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Player 1
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U
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a,w
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b,x
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D
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c,y
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d,z
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Where the following relations hold:
a>d>b; a>d>c
w>z>y; w>z>x