Reference no: EM132072868

Depict the following situation as a game in extensive form, and also in strategic form. Two corporations manufacturing nearly identical chocolate bars are independently considering whether or not to increase their advertising budgets by $500,000. The sales experts of both corporations are of the opinion that if both corporations increase their advertising budgets, they will each get an equal share of the market, and the same result will ensue if neither corporation increases its advertising budget. In contrast, if one corporation increases its advertising budget while the other maintains the same level of advertising, the corporation that increases its advertising budget will grab an 80% market share, and the other will be left with a 20% market share. The decisions of the chief executives of the two corporations are made simultaneously; neither one of the chief executives knows what the decision of the other chief executive is at the time she makes her decision. [Note: for payoffs in this problem, just describe the overall outcome.]