4. Suppose in 1977 Honda and Toyota each have to decide whether to build an automobile plantin the North American market. The payoff matrix below shows Honda's payoff on the left, andToyota's on the right. Is there a Nash equilibrium? If so, where, and how do you know?ТoyotaBuild smallDon't build anythingplantBuild small16, 1620, 15HondaplantDon't buildanything15, 2018, 18

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ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Question

4. Suppose in 1977 Honda and Toyota each have to decide whether to build an automobile plant
in the North American market. The payoff matrix below shows Honda's payoff on the left, and
Toyota's on the right. Is there a Nash equilibrium? If so, where, and how do you know?
Тoyota
Build small
Don't build anything
plant
Build small
16, 16
20, 15
Honda
plant
Don't build
anything
15, 20
18, 18

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