The equilibrium strategy combination in prisoners’ dilemma Concept Introduction: Prisoners’ Dilemma - It is a classic duopoly paradox in decision analysis under games theory. It shows how rational individuals or individual firms act in self-interest and pursue a strategy that is not mutually beneficial or ideal.

Question

Game theory. Pretend you're in the following situation: A and B are two different cloth making enterprises. Both companies A and B were successful in bringing their products to market. However, because company A was the first to make a move, a significant portion of the country's population chose to use the product manufactured by company A because they had already established a positive reputation in the market. Although the revenues of company A were increasing, the company B was struggling to maintain its position in the market with their goods. Because firm A was the first to make a move, it enjoys a competitive advantage over company B in the marketplace. 1. Prove that the situation IS а game (explain strategic interaction/conflict) and solve the game with appropriate approach.

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Question

Chapter 10, Problem 3.10PA

To determine

The equilibrium strategy combination in prisoners’ dilemma

Concept Introduction:

Prisoners’ Dilemma- It is a classic duopoly paradox in decision analysis under games theory. It shows how rational individuals or individual firms act in self-interest and pursue a strategy that is not mutually beneficial or ideal.

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Game theory. Pretend you're in the following situation: A and B are two different cloth making enterprises. Both companies A and B were successful in bringing their products to market. However, because company A was the first to make a move, a significant portion of the country's population chose to use the product manufactured by company A because they had already established a positive reputation in the market. Although the revenues of company A were increasing, the company B was struggling to maintain its position in the market with their goods. Because firm A was the first to make a move, it enjoys a competitive advantage over company B in the marketplace. 1. Prove that the situation IS а game (explain strategic interaction/conflict) and solve the game with appropriate approach.

A game involves two players: player A and player B. Player A has three strategies a1, a2 and a3 while player B has three strategies b1, b2 and b3. Player B b1 b2 b3 a1 -40,30 70,20 -10,120 Player A a2 40,60 80,80 60,20 a3 -30,40 -50,110 150, -70 Assuming that this is a one-time game, answer the following questions: Is there any dominant strategy for each player? What is the secure strategy of each player. What is the Nash equilibrium of the game?

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