2.3 Questions on Games and Strategic Behavior a. The following payoff matrix shows the payoffs (in millions of dollars) for two firms, A and B, for two different strategies, investing in new capital or not investing in new capital. Firm B Invest Not Invest 20 for A 70 for A hastoInvest 20 for B 5 for B Firm A 5 for A 50 for A they do Not Invest 70 for B 50 for B Does Firm A have a dominant strategy? What about Firm B? Is this a prisoner's dilemma? Explain. (10 points) b. Player 1 and Player 2 are playing a game in which Player I has the first move at A in the decision tree shown below. Once Player 1 has chosen either Up or Down, Player 2, who can see what Player 1 has chosen, must choose Up or Down at B or C. Both players know the payoffs at the end of each branch. What is the equilibrium outcome of this game? (What strategy will Player 1 choose? What strategy will Player 2 choose? Explain.) (10 points) Player 2 sthesite wame offsome tag salomechooses Up $5 for player 1 B $30 for player 2 $20 for player 1 Down Player 1 A $35 for player 2 chooses $6 for player 1 Down $1 1 for player 2 C Player 2 Down $15 for player 1 chooses $10 for player 2