If you're an FBA seller share the buy box price you'll get a % of the traffic. You can undercut if you really need to sell faster but if your competitor does the same you both race to the bottom.
If you're an FBM seller you need to undercut until you get it or sit sit on the stock longer until someone digs in looking for a cheaper price.
The exception to this is if Amazon is in the listing. If possible look at the Keepa data and see what other sellers are pricing at. Sometimes Amazon is happy to share the box other times they want a stranglehold on it no matter how much you slash your margin.