Firm BStrategy 1 Strategy 2Strategy 1: 28, 28 15, 35Firm AStrategy 2: 35, 15 20, 20Does Firm B have a dominant strategy? If so, which strategy?

What is the dominant strategy of DC Comics?  What would Marvel Comics choose given the dominant strategy of DC? Where are the firms doing as best as they can given the scenario, i.e. where is the Nash Equilibrium?

b) What is the Dominant strategy of ADM? c) What is the Dominant strategy of Ajinomoto? e) If these 2 firms co-operate can they do better in terms of maximizing their profits?

Solve for the Stackelberg subgame-perfect Nash equilibrium for the fol- lowing game tree (see next page). What is the joint-profit maximizing outcome? Why is that not the outcome of this game?

Explain and discuss game theory approach of modeling competition: a) What is the difference between the equilibrium in dominant strategies and Nash equilibrium? Show one game example in tabular (simple) form and the other in decision tree (extended) form to support your answer. b) In what circumstances players choose to follow maximin strategy? Support your answer with specific examples please.

Profits for two competing firms depend on the decisions to advertise or not to advertise as follows: If neither firm advertises, each makes a weekly profit of $100. If one firm advertises while the other does not, the firm that advertises makes $120 while the firm that doesn’t advertise makes $60. If both firms advertise, each firm makes $80. (a)  What is the Nash equilibrium? Is this outcome efficient, from the perspective of the two firms? (b)  How does the outcome of the game change if the parties can make a binding agreement in advance about advertising practices? (c)  How does the game change if it is repeated over the course of many weeks (but the firms cannot make a binding agreement about how much advertising they will do)?

1. Consider the pricing game between firm 1 (row) and firm 2 (column) belowwhere each number represents the profits made by each firm.:Table 1: Pricing gameLow HighLow 288,288 360,216High 216,360 324,324 a) Point out the Nash equilibrium. Is this a unique Nash equilibrium?c) What type of commitment can firm 1 make to improve its pay-off?Can it be classified as a threat or promise? (Assume that the commitmentis credible.)d) How would you represent the game as a game tree with the option tocommit?2. Consider the signalling / production game with the order of play given below.Assuming that the signal is informative (i.e. education is sufficiently costly),how would you change the order of the game to make sure that poolingequilibriums are ruled out? Verbally motivate your answer.• Nature chooses ability of the workers a ∈ (H, L), ability is observed byworkers but not employers.• The worker choose an education level s ∈ (0, 1).• The employer offer contracts w(s).• The worker accepts or…

Synergy and Dynaco are the only two firms in a specific high-tech industry. They facethe following payoff matrix as they decide upon the size of their research budget:a. Does Synergy have a dominant strategy? Explain.b. Does Dynaco have a dominant strategy? Explain.c. Is there a Nash equilibrium for this scenario? Explain. (Hint: Look closely at thedefinition of Nash equilibrium.)

Consider two firms in the Australia market. The table below depicts each firm’s profits, depending on what price both firms charge.   a. Find (if any) each firm's dominant strategy. b. Which strategy does each firm choose in equilibrium when collusion (joint agreement) is not allowed? c. Suppose that collusion is allowed between the two firms. Could these firms benefit from collusion? Why or why not?

What is the dominant strategy of DC Comics?