If Synergy believes Dynaco will go with a large budget, it will choose a budget. If Synergy believes Dynaco will go with a small budget, it will budget. Therefore, Synergy a dominant strategy. choose a If Dynaco believes Synergy will go with a large budget, it will choose a choose a budget. Therefore, Dynaco True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.) True budget. If Dynaco believes Synergy will go with a small budget, it will a dominant strategy. False

ENGR.ECONOMIC ANALYSIS
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Author:NEWNAN
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Chapter1: Making Economics Decisions
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7. High-tech Industry
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their
research budget:
Dynaco's Decision
Synergy's Decision
Large Budget
Large Budget $30 million, $20 million
Small Budget
$0, $30 million
If Synergy believes Dynaco will go with a large budget, it will choose a
choose a budget. Therefore, Synergy
True
Small Budget
$70 million, 50
$50 million, $40 million
False
If Dynaco believes Synergy will go with a large budget, it will choose a
choose a budget. Therefore, Dynaco
budget. If Synergy believes Dynaco will go with a small budget, it will
a dominant strategy.
True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.)
budget. If Dynaco believes Synergy will go with a small budget, it will
a dominant strategy.
Transcribed Image Text:7. High-tech Industry Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Dynaco's Decision Synergy's Decision Large Budget Large Budget $30 million, $20 million Small Budget $0, $30 million If Synergy believes Dynaco will go with a large budget, it will choose a choose a budget. Therefore, Synergy True Small Budget $70 million, 50 $50 million, $40 million False If Dynaco believes Synergy will go with a large budget, it will choose a choose a budget. Therefore, Dynaco budget. If Synergy believes Dynaco will go with a small budget, it will a dominant strategy. True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.) budget. If Dynaco believes Synergy will go with a small budget, it will a dominant strategy.
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