### Game Theory in Software Pricing**Payoff Matrix**| | **Firm 1** | | ||---------------|-------------------|----------------|----------------|| | **Sell** | **Give away** | || **Firm 2** | | | || **Sell** | 1: $3 | 1: $4 | || | 2: $3 | 2: -$1 | || **Give away** | 1: -$1 | 1: $2 | || | 2: $4 | 2: $2 | |- Each cell shows the profits in millions of dollars for both firms: (Firm 1's profit, Firm 2's profit).**Scenario:**Two software firms have developed an identical new software application. They are debating whether to give the new app away for free and then sell add-ons or sell the application at $30 a copy. The payoff matrix above shows the profits in millions of dollars.**Question:**What is Firm 1's best strategy?**Options:**1. Give away the application only if Firm 2 sells the application.2. Sell the application at $30 a copy regardless of what Firm 2 does.3. Give away the application regardless of what Firm 2 does.4. Give away the application only if Firm 2 gives away the application.**Selected Answer:** - Give away the application regardless of what Firm 2 does.

The dominant strategy is the best course of action no matter what type of strategy is followed by…

m2 Sell Give away Sell 1: $3 2: $3 1: -$1 2: $4 Firm 1 Give away. 1: $4 2: -$1 1: $2 2: $2 software firms have developed an identical new software application. They are debating whether to give the new app away fre then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dolla at is Firm 1's best strategy? Give away the application only if Firm 2 sells the application. Sell the application at $30 a copy regardless of what Firm 2 does. Give away the application regardless of what Firm 2 does.

m2 Sell Give away Sell 1: $3 2: $3 1: -$1 2: $4 Firm 1 Give away. 1: $4 2: -$1 1: $2 2: $2 software firms have developed an identical new software application. They are debating whether to give the new app away fre then sell add-ons or sell the application at $30 a copy. The payoff matrix is above and the payoffs are profits in millions of dolla at is Firm 1's best strategy? Give away the application only if Firm 2 sells the application. Sell the application at $30 a copy regardless of what Firm 2 does. Give away the application regardless of what Firm 2 does.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Don't use ai to answer I will report your answer Solve it Asap with explanation and calculation..... See the following game tree. Find all the (pure strategy ) sub - game perfect Nash equilibria
4. Consider the following model of a bank run. Depositors may either Hold or Withdraw their funds from a bank. Both players hold deposits of 6, which earn interest of 1 if kept in the bank. If either depositor withdraws then the bank fails. If both try to withdraw then each depositor can only recover half of their deposits. The payoffs for a two-player version of this game are given below: Player 2 Player 1 Hold Withdraw Hold 7,7 6,0 Withdraw 0,6 3,3
M7
Solve the attahment.
9
Two technology companies, Bapple and Hoogle, are interested in attracting more software engineers to work and are considering introducing a personal shopper for employees as a new perk. The following game depicts the strategic outcomes that result from the game. Increases in annual profits of the two growing technology companies are shown in the table below. Bapple Offer the new perk Do not offer the new perk A $80 million B $10 million C Hoogle $60 million D $30 million Offer the new perk Hoogle = $20 million Bapple = $30 million Hoogle = $60 million Bapple = $10 million Refer to the Table. If both companies follow a dominant strategy, Bapple's annual profit will grow by Use letters in alphabetical order to select options Do not offer the new perk Hoogle = $5 million Bapple = $80 million Hoogle = $40 million Bapple = $60 million
PLEASE CHECK THIS HOW TO SOLVE you do you know the value of c is 3
8. Collusive outcome versus Nash equilibrium Consider a remote town in which two restaurants, All-You-Can-Eat Café and GoodGrub Diner, operate in a duopoly. Both restaurants disregard health and safety regulations, but they continue to have customers because they are the only restaurants within 80 miles of town. Both restaurants know that if they clean up, they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $13,000; alternatively, if they both hire workers to clean, each will earn only $10,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $18,000, and the other restaurant will make only $6,000. Complete the following payoff matrix using the information just given. (Note: All-You-Can-Eat Café and GoodGrub Diner are both profit-maximizing firms.) All-You-Can-Eat Café Cleans Up Doesn't Clean Up $ GoodGrub…
PLEASE CHECK THIS HOW TO SOLVE
The dropdown options are "Cleans" or "Does not clean." thank you!
8. Collusive outcome versus Nash equilibrium Suppose there is a remote stretch of highway along which two restaurants, Last Chance Café and Desolate Diner, operate in a duopoly. Neither restaurant invests in keeping up with health code regulations, but regardless they both have customers as they are the only dining options along a 79- mile portion of the road. Both restaurants know that if they clean up and comply with health codes they will attract more customers, but this also means that they will have to pay workers to do the cleaning. If neither restaurant cleans, each will earn $11,000; alternatively, if they both hire workers to clean, each will earn only $8,000. However, if one cleans and the other doesn't, more customers will choose the cleaner restaurant; the cleaner restaurant will make $15,000, and the other restaurant will make only $3,000. Complete the following payoff matrix using the information just given. (Note: Last Chance Café and Desolate Diner are both…
ABC Inc. Offer Rebate No Rebate XYZ Corp offer Rebate 20.10 30,0 No Rebate 12, 16. 20, 4 In the game above, in the equilibrium strategies: Lutfen birini seçin O A are for XYZ to offer a rebate, and ABC not to offer a rebate. O B are for ABC to offer a rebate, and XYZ not to offer a rebate. O C are for both firms to effer no rebate OD are for both firms to offer rebates