Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Rival Technology A Rival: Technology B Rival: True Technology A False Microsoft Microsoft Microsoft True or False: There is an equilibrium for this game in pure strategies. Rival: Rival: Technology B Microsoft Microsoft
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility. Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously. Rival Technology A Rival: Technology B Rival: True Technology A False Microsoft Microsoft Microsoft True or False: There is an equilibrium for this game in pure strategies. Rival: Rival: Technology B Microsoft Microsoft
Principles of Microeconomics (MindTap Course List)
8th Edition
ISBN:9781305971493
Author:N. Gregory Mankiw
Publisher:N. Gregory Mankiw
Chapter17: Oligopoly
Section: Chapter Questions
Problem 9PA
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Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility.
Transcribed Image Text:3. Individual Problems 15-3
Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same
technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two
companies select different technologies, Microsoft's payoff is 3 units of utility, while the small rival suffers a loss of utility of 1. If the two companies
select the same technology, Microsoft suffers a loss of utility of 1 while the rival gains 1 units of utility.
Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously.
Rival
Technology A Rival:
Technology B Rival:
True
Technology A
O False
Microsoft
Microsoft
Microsoft
True or False: There is an equilibrium for this game in pure strategies.
Rival:
Rival:
Technology B
Microsoft
Microsoft
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