Coke and Pepsi
This article discusses the puzzling question of why Coke and Pepsi are never on sale at the same time. Research has shown that the two companies rarely have promotions going on simultaneously. In fact, in a one year span, the two companies ran non-overlapping promotions for 26 weeks. This is not a strange coincidence; statistically, the probability of that happening by chance is 1/495,918,532,948,104 (from article).
The two companies must be cooperating together, then, to plan out when each company will run promotions. But the question is, why? At first, it seems logical for a company to have promotions as much as possible, regardless of what their competitors are doing. It makes sense that if a company have has prices, customers will be more apt to try their product . However, the effects of 2 companies having sales at the same time is beneficial to neither company.
This is a problem that involves game theory. Suppose Pepsi and Cola each have 10 loyal customers when their products are regularly-priced. The 10 customers prefer the taste of one over the other, and the prices of each company are the same when they are regular price, so they stick to their favorite soda brand. But suppose both companies decided to have a sale at the same time. The 10 loyal customers of each brand have no reason to try the other brand; both companies are still the same price, they are just lower. So, the customers still stick to their brand, but the companies do not make as much money when they are selling it at a lower price.
However, if one company decides to lower their price, customers of the non-sale brand have a reason to switch over and try the new brand; it’s cheaper than the other! With a lower price , the payoff of the customer’s ‘favorite brand’ may be not worth as much as the payoff on the other, cheaper brand. This will get more people to try the other brand, and let the company make a bigger profit.
This is a great example of how one’s decision can be affected by others. This idea of “silent cooperation” is not just in Coke and Pepsi, but can also be seen in many other situations, too.
-lish13
source: http://mindyourdecisions.com/blog/2011/09/06/why-are-coke-and-pepsi-never-on-sale-at-the-same-time-an-answer-from-game-theory/?dhiti=1