Q13 George and Jerry are competitors in a local market. Each is trying to decide if it is
better to advertise on TV, on radio, or not at all. If they both advertise on TV, each will
earn a profit of €3,000. If they both advertise on radio, each will earn a profit of €5,000.
If neither advertises at all, each will earn a profit of €10,000. If one advertises on TV
and the other advertises on radio, then the one advertising on TV will earn €4,000 and
the other will earn €2,000. If one advertises on TV and the other does not advertise,
then the one advertising on TV will earn €8,000 and the other will earn €5,000. If one
advertises on radio and the other does not advertise, then the one advertising on radio
will earn €9,000 and the other will earn €6,000. If both follow their dominant strategy,
then George will:
(a) advertise on TV and earn €3,000;
(b) advertise on radio and earn €5,000;
(c) advertise on TV and earn €8,000;
(d) not advertise and earn €10,000;
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