Question

Microsoft and a smaller rival often have to select from one of two competing technologies, A and 8. The rival always prefers to select the same compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility select the same technology, Microsot suffers a loss of utilty of 3 while the rival gains 3 units of utility while the small rival suffers a loss of utility of 3. If the two companies Using the given information, fillin the payoffs for each cell In the matrix, assuming that each company chooses its technology simultaneously Microsoft Technology A Technology Technology A Rival: Technology 8 Rival Microsoft Rival: Microsoft Rival Microsoft Rival: Microsoft True or False: There is no equibrium in pure strategies True O False

Answer 1

1.

	Microsoft: Technology A	Microsoft: Technology B
Rival: Technology A	Rival: 3; Microsoft: -3	Rival: -3; Microsoft: 6
Rival: Technology B	Rival: -3; Microsoft: 6	Rival: 3; Microsoft: -3

TRUE
(When Rival choose Technology A, Microsoft's best response is technology B (6)
When Rival choose Technology B, Microsoft's best response is technology A (6)
When Microsoft choose Technology A, Rival's best response is technology A (3)
When Microsoft choose Technology B, Rival's best response is technology B (3)
So, there is no Nash equilibrium in pure strategy as their best response never occur simultaneously.)

2.

The Nash equilibrium is for Mr. Ward to Vote and for Mrs. Ward to Vote. Mr. Ward receives a payoff of -2, and Mrs. Ward receives a payoff of -2.
(When Mr. Ward choose to Vote, Mrs. Ward's best response is to vote (-2)
When Mr. Ward choose to Not Vote, Mrs. Ward's best response is to vote (2)
When Mrs. Ward choose to Vote, Mr. Ward's best response is to vote (-2)
When Mrs. Ward choose to Not Vote, Mr. Ward's best response is to vote (2)
So, the Nash equilibrium is (Vote, Vote) as their best response occur simultaneously when they both vote)

True
(Their utility would increase from -2 to 0.)

is not
(Not to vote is not a Nash equilibrium.)