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Company X and Company Y have to decide whether they want to advertise their product
Company X and Company Y have to decide whether they want to advertise their product. Use the payoff matrix below to answer the question below. Company X Company Y Advertise Advertise X: $10,000 Y: $10,000 X: $7,000 Y: $7,000 Don't Advertise X: $5,000 Y: $5,000 X: $2,000 Y: $10,000 Don't Advertise
12. Is there a Nash Equilibrium in this market? If so, what is it? 13. Does Company X have a dominant strategy? If so, what is it? 14. Does Company Y have a dominant strategy? If so, what is it? ly 15. True or false: Company X and Company Y's payoff matrix represents a prisoner's dilemma.
Expert Solution
12) Yes , Nash equilibrium is : ( Advertise , Advertise ) = ( 10,000 , 10,000 ) .
13) Yes , it is Advertise . This is because whatever strategy company Y chooses , company X always chooses to Advertise , so it is dominant strategy .
14) No , it does not have a dominant strategy . Company Y's strategy changes with company X's choices .
15) False . Its not a prisoner's dilemma . Both cooperate and get the highest payoff .
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