The mixed stratergy nash equalibrium consists of : the probability of firm A selecting October is 0.692 and probability of firm A selecting December is 0.309. The probability of firm B selecting October is 0.5 and probability of firm selecting December is 0.5.In the equilibrium you calculated above, what is the probability that both consoles are released in October? In December? What are the expected payoffs of firm A and of firm B in equilibrium? Two firms A and B manufacture video game consoles. Firm A's console is less tech-nologically advanced than that of firm B, and firm A knows that if consumers get tochoose between both consoles at the same time, they would choose the console of firmB. Therefore, firm A's only chance to sell a large number of consoles is to release it ata different time than firm B. Firm B prefers to release the console at the same time asfirm A to benefit from the hype and blog reviews.Suppose first that the firms have to commit to a release date in advance. Firms canchoose to release the console either in October or in December. Therefore, while thegame has some dynamic aspect, we can think of the choice of the release date as asimultaneous move game, represented by the payoff matrix below.A \ BOctoberOctober(10, 100)December (50, 50)December(100, 50)(10, 100)

Nash equilibrium is a fundamental concept in game theory, named after mathematician John Nash. It…

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The mixed stratergy nash equalibrium consists of : the probability of firm A selecting October is 0.692 and probability of firm A selecting December is 0.309. The probability of firm B selecting October is 0.5 and probability of firm selecting December is 0.5.

In the equilibrium you calculated above, what is the probability that both consoles are released in October? In December? What are the expected payoffs of firm A and of firm B in equilibrium?

Two firms A and B manufacture video game consoles. Firm A's console is less tech-
nologically advanced than that of firm B, and firm A knows that if consumers get to
choose between both consoles at the same time, they would choose the console of firm
B. Therefore, firm A's only chance to sell a large number of consoles is to release it at
a different time than firm B. Firm B prefers to release the console at the same time as
firm A to benefit from the hype and blog reviews.
Suppose first that the firms have to commit to a release date in advance. Firms can
choose to release the console either in October or in December. Therefore, while the
game has some dynamic aspect, we can think of the choice of the release date as a
simultaneous move game, represented by the payoff matrix below.
A \ B
October
October
(10, 100)
December (50, 50)
December
(100, 50)
(10, 100)

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