In a one-shot game, if you advertise and your rival advertises, you will each ea

Question

In a one-shot game, if you advertise and your rival advertises, you will each earn $5 million in profits. If neither of you advertises, your rival will make $4 million and you will make $2 million. If you advertise and your rival does not, you will make $10 million and your rival will make $3 million. If your rival advertises and you do not, you will make $1 million and your rival will make $3 million.

a. Write the above game in normal form.

Rival

Advertise

Don’t Advertise

You

Advertise

Don’t Advertise

b. Do you have a dominant strategy?

c. Does your rival have a dominant strategy?

d. What is the Nash equilibrium for the one-shot game?

e. How much would you be willing to bribe your rival not to advertise?

Advertise

Don’t Advertise

You

Advertise

Don’t Advertise

Explanation / Answer

Rival

Advertise

Don’t Advertise

You

Advertise

5,5

10,3

Don’t Advertise

1,3

2,5

YOU has a dominant strategy to advertize

RIVAL has no dominant strategy

Nash Equlibrium (Advetrize, advertize)

Upto 5 units

Advertise

Don’t Advertise

You

Advertise

5,5

10,3

Don’t Advertise

1,3

2,5

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.