Question 20 of 28 Sapling Learning macmillan learning Disney and Paramount are b
ID: 1113562 • Letter: Q
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Question 20 of 28 Sapling Learning macmillan learning Disney and Paramount are both releasing an animated movie at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix below contains the estimated profits for both companies for all possible strategies. Paramount's profits are in the lower (green) triangle of each cell and Disney's profits are in the upper (blue) triangle of each cell Profits (payoffs) are in millions of dollars 1. What is Disney's dominant strategy? Disney O strategy 1 O strategy 2 Strategy 1 Strategy 2 A$150 B$300 Disney does not have a dominant strategy Strategy 1 $150 $25 2. What is the Nash equilibrium in this game? Paramount There is not a Nash equilbrium C $25 $75 Strategy 2 $300 $75 Previous e Check Answer Next Exit HintExplanation / Answer
Answer 1:- What is Disney’s dominant strategy:-
Correct Answer:- Strategy 2
Reason:- When Paramount selects the strategy 1, Disney is better off selecting the strategy 2 as it will yield better outcomes. Similarly, when Paramount opt for strategy 2, Disney will be again better off if it selects the strategy 2 as it will yield it $75 from strategy 2 than $25from strategy 1. As irrespective of the selection of Paramount i.e. strategy 1 or staregy2, Disney is going to select only strategy 2, therefore strategy 2 is the DOMINANT strategy for Disney.
Answer:- What is the Nash equilibrium in this game:-
Correct Answer:-D
Reason:- First consider the selection of strategy by Paramount. When Disney opt for strategy 1, Paramount will go for strategy 2 yielding it $300, when strategy 2 is selected by Disney, paramount will g for strategy 2 yielding it $75.
Now consider the strategy selection of Disney. When Paramount selects the strategy 1, Disney is better off selecting the strategy 2 as it will yield better outcome of $300. Similarly, when Paramount opt for strategy 2, Disney will be again better off if it selects the strategy 2 as it will yield it $75 from strategy 2 than $25 from strategy 1. As irrespective of the selection of Paramount i.e. strategy 1 or staregy2, Disney is going to select only strategy 2.
As the strategy in the cell D is selected by both the players, thus it will be termed as Nash Equilibrium,.
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