What is the Nash Equilibrium of this game?

Exploring Economics
8th Edition
ISBN:9781544336329
Author:Robert L. Sexton
Publisher:Robert L. Sexton
Chapter15: Oligopoly And Strategic Behavior
Section: Chapter Questions
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Both firms invest.

B. Both firms don’t invest.

C. Firm A chooses invest and Firm B chooses don’t invest only.

D. Firm B chooses invest and Firm A chooses don’t invest only.

E. Both C and D are correct

 

 

MCQ question 1
Two firms are deciding whether to invest in a new technology or not. The payoff matrix for
the two firms (Firm A, Firm B) is as follows:
Firm
A
Invest
(i)
Don't invest (iii)
What is the Nash Equilibrium of this game?
Invest
0,0
1,3
Firm B
Don't Invest
(ii)
(iii)
3,1
2,2
Transcribed Image Text:MCQ question 1 Two firms are deciding whether to invest in a new technology or not. The payoff matrix for the two firms (Firm A, Firm B) is as follows: Firm A Invest (i) Don't invest (iii) What is the Nash Equilibrium of this game? Invest 0,0 1,3 Firm B Don't Invest (ii) (iii) 3,1 2,2
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