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Consider the following payoff matrix, where the payoffs are profits in thousand $. Explanation of payoff: If Player 1 chooses Strategy A and player 2

Consider the following payoff matrix, where the payoffs are profits in thousand $.

Explanation of payoff: If Player 1 chooses Strategy A and player 2 chooses Strategy B then Player 1 gets $150,000 and Player 2 gets $140,000

Player 2

Strategy A BC

A280, 220150, 140300, 150

Player 1

B260, 240130,220280, 145

C240, 225120, 130290, 230

1.Find the Nash equilibrium if the players make the decisions simultaneously.

2.Do either player have a dominant strategy? Is this a prisoner's dilemma problem?

3.Find the outcome if both players are risk averse and choose a maxi-min strategy.

4.Now consider the game as sequential.How much would player 2 invest to be the first mover?

5.Is there any potential for side payments? If so, who will pay and how much? Explain clearly.

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