1.4 Suppose Procter & Gamble (PG) and Johnson &

Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose a high, medium, or low level of advertising.What are each firm’s best responses to its rival’s strategies?

Does either firm have a dominant strategy? What is the Nash equilibrium in this game? (See Solved Problem 13.1.)

weekend in 2003 that Warner released its movie Matrix 2. Suppose that Warner had not purchased the distribution rights to T-3 and that the film’s producer retained the rights. Warner would have had to decide whether to release Matrix 2 on the July 4 weekend or on the July 18 weekend. Simultaneously, T-3’s producer would have had to decide which of those two weekends to release its film.

The payoff matrix (in millions of dollars) of the simultaneous-moves game would have been PG JNJ High Medium Low High Low Medium 1

2 1 3 4

6 3

3 5

6 5 7 5

2 5

5 3

4 Max 3

–1

–1 0 3 0 2

1 Work Loaf Bonus No Bonus Lori