Nash equilibrium through rationalizability can be achieved in games with upward-sloping best-response curves if the rounds of eliminating never-best-response strategies begin with the smallest...

Nash equilibrium through rationalizability can be achieved in games with upward-sloping best-response curves if the rounds of eliminating never-best-response strategies begin with the smallest possible values. Consider the pricing game between Xavier’s Tapas Bar and Yvonne’s Bistro that is illustrated in and the best-response rules from which it is derived to begin rationalizing the Nash equilibrium in that game. Start with the lowest possible prices for the two firms and describe (at least) two rounds of narrowing the set of rationalizable prices toward the Nash equilibrium.