Would the firms want to ban lawyers from the grant

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Reference no: EM133499118

Every year, two firms that produce renewable fuels compete for a $2 million federal grant, and their proposals are reviewed by an expert panel that chooses the best proposal. One firm will win the $2 million grant while the other firm receives nothing. Each firm can choose to hire, or not hire, an expensive technology lawyer (at a cost of $400,000) who is effective at presenting the proposal in the best light. If neither firm hires a lawyer or if both firms hire lawyers, each side can expect to win about half the time. If only one firm hires a lawyer, it can expect to win three-quarters of the time. The legal fees are not contingent on success and must be paid regardless of the grant outcome.

Question a. Diagram the players, moves, and payoffs for this simultaneous-move game.

Question b. What is the Nash equilibrium of the game?

Question c. Is this game a prisoners' dilemma? Please explain your response.

Question c. Would the firms want to ban lawyers from the grant competition?

Reference no: EM133499118

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