What is the Nash equilibrium of this simultaneous-move game? (b) What would the outcome of this game be if instead firm 1 moved first and then, after seeing what firm 1 chose, firm 2 chose it strategy? In this case firm 1 doesn’t necessarily need to choose a best response, but firm 2 must choose a best response since it moves second.
Solve for the Nash equilibrium (or equilibria) in each of the following games.
(a) The following two-by-two game is a little harder to solve since firm 2’s
preferred strategy depends of what firm 1 does. But firm 1 has a dominant
strategy so this game has one Nash equilibrium.
Firm 2
Launch Don’t
Firm 1 Launch 60, -10 100, 0
Don’t 80, 30 120, 0
What is the Nash equilibrium of this simultaneous-move game?
(b) What would the outcome of this game be if instead firm 1 moved first and then, after seeing what firm 1 chose, firm 2 chose it strategy? In this case firm 1 doesn’t necessarily need to choose a best response, but firm 2 must choose a best response since it moves second.
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