In a situation that occurs only once, if you advertise and your rival advertises, you will each earn $5 million in profits. If neither of you advertises, your rival will make $4 million and you will make $2 million. If you advertise and your rival does not, you will make 10 million and your rival will make $3 million. If your rival advertises and you do not, you will make $1 million and your rival will make $3 million.

Set up the situation in a normal form. Do you have a strategy that you will choose no matter what your rival does?

Is there a strategy your rival will choose no matter what you do?

What is the solution or equilibrium?

How much would you be willing to pay your rival not to advertise?