BP and ExxonMobil are engaged in negotiations regarding a new exploration. Simultaneously BP can choose to play Tough (T) or soft (S), while ExxonMobil can opt for Intransigent (I) or Acquiesce (A). The payoffs are as follows. If the choices are T and I, the payoffs are (5, 1) to BP and ExxonMobil, respectively. If the choices are S and I the payoffs are (6, 2) for BP and ExxonMobil, respectively. If the actions of the firms are T and A, the payoffs are (3, 3), and if the actions are S and A, then the payoffs are (4, 4). Which of the following statements are true? BP has a dominant strategy play S. The Nash equilibrium is (S, A) ExxonMobil has a dominant strategy to play A. The dominant strategy equilibrium is (S, A) These negotiations resemble a prisoners’ dilemma.
3. BP and ExxonMobil are engaged in negotiations regarding a new exploration. Simultaneously BP can choose to play Tough (T) or soft (S), while ExxonMobil can opt for Intransigent (I) or Acquiesce (A). The payoffs are as follows. If the choices are T and I, the payoffs are (5, 1) to BP and ExxonMobil, respectively. If the choices are S and I the payoffs are (6, 2) for BP and ExxonMobil, respectively. If the actions of the firms are T and A, the payoffs are (3, 3), and if the actions are S and A, then the payoffs are (4, 4). Which of the following statements are true?
BP has a dominant strategy play S.
The Nash equilibrium is (S, A)
ExxonMobil has a dominant strategy to play A.
The dominant strategy equilibrium is (S, A)
These negotiations resemble a prisoners’ dilemma.
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