Disney and Paramount are both releasing an animated movie at the same time. Each
ID: 1206763 • Letter: D
Question
Disney and Paramount are both releasing an animated movie at the same time. Each company is fairly well known, and they are both deciding between pursuing two advertising strategies. Each firm knows that its profits will be affected by its own decision and the decision of the competing firm. The payoff matrix below contains the estimated profits for both companies for all possible strategies. Paramount's profits are in the lower (green) triangle of each cell and Disney's profits are in the upper (blue) triangle of each cell. Profits (payoffs) are in millions of dollars. What is Disney's dominant strategy What is the Nash equilibrium in this gameExplanation / Answer
Disney's dominant strategy is Strategy 2. it is because the sum of the payoffs of the second strategy is higher than the sum of the first strategy.
D is the t nash equilibrium in he game because,
(1,1) BOTH THE PLAYERS CAN gain further by deviating from this strategy so its not at nash equilibrium of the game.
(1,2) paramount can gain further by devaiting from this strategy. thus this not a nash equilibrium of thr game.
(2,1) disney can gain further by devaiting from this strategy. thus this not a nash equilibrium of thr game.
(2,2) Neither player can increase her payoff by choosing an action different from her current one. Thus this action profile is a Nash equilibrium.