Determine each parks optimal strategy

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Reference no: EM13772552

Two amusement parks that are located on either side of a highway are considering promotional advertising campaigns to stimulate demand. If both parks advertise, then both will experience a $20 thousand increase in profits. If Park A advertises and Park B does not, then Park A will experience a $10 thousand dollar increase in profits and Park B will experience a $5 thousand increase in profits. If Park B advertises and Park A does not, then Park A will experience a $30 thousand increase in profits and Park B will experience a $10 thousand increase in profits. If neither park advertises, then profits will remain constant. Use this information to construct a payoff matrix. Determine each parks optimal strategy. Is this a prisoners dilemma? Does either park have a dominant strategy? Is there a Nash equilibrium and, if there is, what is it? How is the concept of credible threat relevant to this game?

Reference no: EM13772552

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