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Consider a game where XBox and Playstation are deciding how to market their consoles. They are used in two different ways for gaming or for
Consider a game where XBox and Playstation are deciding how to market their consoles. They are used in two different ways for gaming or for media applications. Xbox's comparative advantage is in media applications whereas Playstation's is in gaming. In their marketing campaigns, each company can emphasize its strength as either a gaming system, a media system, or a complete package, i.e. both. XBox Gaming Media Both Gaming | 11,8 6,12 10, 14 Playstation Media | 12,9 8,10 9,8 Both | 11, 6 12, 11 4,6 a) Suppose the firms make their marketing decisions simultaneously. Are there pure strategy Nash equilibria? If so, what are they? Show your work and Explain. b) Suppose instead that Xbox can move first. What will be the equilibrium path now? Will Xbox want to move first? Will Playstation want them to? Explain
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