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Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the

Microsoft and a smaller rival often have to select from one of two competing technologies, A and B. The rival always prefers to select the same technology as Microsoft (because compatibility is important), while Microsoft always wants to select a different technology from its rival. If the two companies select different technologies, Microsoft's payoff is 6 units of utility, while the small rival suffers a lossof utility of 2. If the two companies select the same technology, Microsoft suffers a lossof utility of 2 while the rival gains 2 units of utility.

Using the given information, fill in the payoffs for each cell in the matrix, assuming that each company chooses its technology simultaneously.

Microsoft
Technology A Technology B
Rival Technology A

Rival:

,Microsoft

Rival:

,Microsoft

Technology B

Rival:

,Microsoft

Rival:

,Microsoft

True or False: There is no equilibrium in pure strategies.

True

False

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