As the Disney and Warner brothers are the examples of Oligopolistic industry so they must use game theory. As given in matrix below disney warner brothersstar wars pirrates of carribianthe matrix$100$300$80$200superman$500$50$800$300a) If Warner Brother chooses to make Superman, which movie version will Disney choose?b) With this perfect information which movie will respective company make?

a) If Warner Brothers choose to make superman, then given the matrix, Disney would choose pirates of…

Answered: As the Disney and Warner brothers are…

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter10: Monopolistic Competition And Oligopoly

Section: Chapter Questions

Problem 4SCQ: Sometimes oligopolies in the same industry are very different in size. Suppose we have a duopoly...

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As the Disney and Warner brothers are the examples of Oligopolistic industry so they must use game theory. As given in matrix below

			disney
warner brothers	star wars		pirrates of	carribian
the matrix	$100	$300	$80	$200
superman	$500	$50	$800	$300

a) If Warner Brother chooses to make Superman, which movie version will Disney choose?

b) With this perfect information which movie will respective company make?

Definition Definition Economic decision-making framework that analyzes how different players optimize their outcomes with given pay-offs corresponding to their available strategies. The assumptions of game theory are: The number of players or competitors are finite/limited; All participants are rational The rules of the game are known to every player; and Each participant has a finite set of actions. A common way in which game theory is presented as an ( m x n ) matrix in which m represents the strategies of row player and n represents the strategies of column player. There are several limitations of game theory: Many businesses have a large number of competitors, and selecting an optimal strategy in these circumstances is difficult; Real-life business operating environments are full of uncertainty and difficult to model as a game theory; and The assumption of rationality and utility maximization isn't always an accurate portrayal of human nature.

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