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Create the payoff matrix for game

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Reference no: EM132422879

Problem: Suppose that Pfizer and Roche are both developing a drug to cure cancer. If neither pharmaceutical company develops a new drug, then each firm's profit would be $150 million. If Pfizer develops a drug and Roche does not develop a drug, then Pfizer makes a profit of $400 million, whereas Roche's profit is $100 million. Similarly, if Roche develops a drug and Pfizer does not develop a drug, then Roche makes a profit of $400 million, whereas Pfizer's profit is $100 million. If both Pfizer and Roche develop a drug, then each pharmaceutical company makes a profit of $300 million.

Required:

Question 1: Create the payoff matrix for this game.

Question 2: What (if any) is the dominant strategy for each firm?

Question 3: What is the Nash equilibrium of the game?

Question 4: Is this game a prisoner's dilemma? Explain.

Reference no: EM132422879

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