First round of strategy elimination

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Reference no: EM133126006

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

$90 $130

75 135

75 140

Papa Johns

$2 mill

70 115

70 120

60 125

 

$3 mill

75 100

80 95

65 90

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: EM133126006

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