During the height of the pandemic, many airlines substantial…
During the height of the pandemic, many airlines substantially cut back on the number of flights offered each day. Now, as demand has increased as people begin travelling again, Delta and United are considering adding flights to their current daily schedules. The following payoff matrix describes the payoffs associated with adding flights or maintaining their current number of flights, where payoffs are listed in millions of dollars. Suppose that, in an effort to further incentivize United, the U.S. government decides to offer United an $8 million subsidy if they decide to increase their # of flights. This subsidy will be paid to United regardless of Delta’s actions. Based on this subsidy, what is the Nash equilibrium in this subsidized game?