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Derive the payoff matrix for short-run profits assuming a 2x2 one-shot simultaneous game between Sony and Microsoft. Assume that Nintendo is a passive observer in
Derive the payoff matrix for short-run profits assuming a 2x2 one-shot simultaneous game between Sony and Microsoft. Assume that Nintendo is a passive observer in the game and does not plan to change its prices. Show your pay-off/short-run profit calculations clearly and state any assumptions you made to derive your results. Identify the Nash equilibrium for this game and comment on whether it is cooperative or non-cooperative. Use the following format for the payoff matrix: [4] Xbox $299 $399 $299 ($299-$258.13) x 11.5 = $470 million ($399-372.29) x 7 = $186.97 million PS3 ($299-$260.89) x 11.25 = $428.74 million ($299-244.81) x 11.75 = $636.73 million $399 ($299-$254) x 12.5 = $562.5 million ($399-$335.25) x 8 = $510 million ($399-$372.67) x 8.25 = $217.22 million ($399-343.86) x 8.75 = $482.48 million
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