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First round of strategy elimination

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Reference no: EM132413261

The following is a payoff matrix showing profit in millions of dollars when two companies simultaneously decide on various advertising budgets ($1 million, $2 million, or $3 million):

Pizza Hut

$1 mill $2 mill $3 mill

$1 mill $700 / $850 600 / 800 550 / 900

Papa Johns $2 mill 750 / 750 750 / 700 600 / 800

$3 mill 800 / 650 700 / 550 650 / 600

a. In the first round of strategy elimination (when all three possible budgets are under consideration), which ad budget would the companies exclude?

b. After the first round of elimination (previous question), would either company make a second-round elimination?

c. What would be the likely outcome of this simultaneous advertising decision (i.e. what ad budget would each company end up choosing)?

Reference no: EM132413261

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