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1. The two leading United State manufacturers of high performance radial tires must set their advertising strategies for coming year. Each company has two strategies available: maintain current advertising or increase advertising by 15 percent. The strategies available to the two firms, G and B, are presented in the payoff matrix below.
Firm B
Increase Adv. Maintain Adv.
Firm G Increase Adv. 27, 27 50, 12
Maintain Adv. 12, 50 45, 45

The entries in the individual cells are profits measured in millions of dollars. Firm G's outcome is listed before the comma, and Firm B's outcome is listed after the comma.
Is there a dominant strategy for each firm? (Answer: Yes or No) What is it?

 

Game Theory, Economics

  • Category:- Game Theory
  • Reference No.:- M9308051

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