Explanation of game theory

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Reference no: EM1315184

You are the manager of copies are us. The only copy store in town, the carbon copy, recently got bids on adding a colour copier. You must decide whether to obtain a colour copier, but you can base decision on what your rival does. If your rival adds a colour copier and you don't you expect your profits to fall by $1,000 per week, However, if you both do the same thing (add colour copies or not), you each expect profits to stay at their current level. Show the extensive form of this game, and find the Nash equilibrium (or equilibrium). Is there a sub-game perfect equilibrium?

Reference no: EM1315184

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