Question: Two firms compete in a declining industry. Each firm has three possible choices: 1) exit the industry immediately (and gets a payoff of O); 2) exit at the end of this quarter; 3) exit at the end of next quarter. Each quarter, if both firms are operating, each incurs a payoff of -1; if a firm operates along, it yields a payoff of 2.
a. Write down this game in normal-form representation (matrix-form is fine)
b. Are there any strictly dominated strategies?
c. Find the pure-strategy Nash equilibria.