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.