Create the payoff matrix for game

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In the market for video game? consoles, Microsoft and Sony are essentially a? duopoly, with Nintendo at a distant third. Consider a purely hypothetical game in which the executives of the two companies are deciding how much they will spend on advertising. To? simplify, assume that they can either spend a lot or spend a little. If both firms spend a? lot, Sony's hypothetical profit will be ?$2 billion and? Microsoft's hypothetical profit will be ?$1 billion. If they both spend a? little, Sony's profit will be ?$9 billion and? Microsoft's profit will be ?$7 billion. If Sony spends a lot and Microsoft spends a? little, Sony's profit will be ?$8 billion and? Microsoft's profit will be ?$2 billion.? Finally, if Sony spends a little and Microsoft spends a? lot, Sony's profit will be ?$3 billion and? Microsoft's profit will be ?$6 billion.

Create the payoff matrix for this game.

Does Sony have a dominant strategy? If so, what is it? Does Microsoft have a dominant strategy? If so, what is it?

What is the Nash equilibrium of the game?

Reference no: EM132492267

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