We have two cable TV companies, Astounding Cable and Broadcast Cable, each simultaneously deciding on a high, medium, or low advertising budget. Their payoffs (in millions) are as follows in the image. True or false? (i) Astounding should play High if Broadcast plays Medium. (ii) This game has a dominant strategies equilibrium. (iii) Astounding playing Medium and Broadcast playing High is a Nash equilibrium.

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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We have two cable TV companies, Astounding Cable and Broadcast Cable, each simultaneously deciding on a high, medium, or low advertising budget. Their payoffs (in millions) are as follows in the image.

True or false?

(i) Astounding should play High if Broadcast plays Medium.

(ii) This game has a dominant strategies equilibrium.

(iii) Astounding playing Medium and Broadcast playing High is a Nash equilibrium.

Broadcast
High
Medium
Low
High
2,-5
5,7
4,9
Astounding Medium
6,4
8,6
5,2
Low
1,2
0,5
3,3
Transcribed Image Text:Broadcast High Medium Low High 2,-5 5,7 4,9 Astounding Medium 6,4 8,6 5,2 Low 1,2 0,5 3,3
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