1. Consider the following innovation game. Firm A must decide whether or not to

Question

1. Consider the following innovation game. Firm A must decide whether or not to introduce a new product. Firm B must decide whether or not to clone firm A's product. If firm A introduces and B clones, then firm A earns $1M and B earns $10 M. If A introduces and B does not clone, then A earns $10M and B earns $2M. If firm A does not introduce, both firms earn profits of $0. Which of the following is true?

a. The subgame perfect equilibrium profits are ($10M1, $2)

b. None of the statements associated with the question is correct

c. Firm A does not care if B clones

d. It is not in Firm A’s interest to introduce the product (Answer is not D)

In the previous innovation game, how many Nash equilibrium (a) are there?

a. 0

b. 0, but there are secure strategies (Answer is not B)

c. 1

d. 2

Explanation / Answer

1)

nash equlibria =1

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.