Need help in solving the attached game theory query!!! Thank you!!
The table below reports the payoffs associated with the two firms' strategies, in millions USD. Assume that all players are rational, and their objective is to maximize their own payoff. Firm A Advertise Do not advertise Firm B Advertise (50, 50) (330, 25) Do not advertise (40, 180) (150, 100) Suppose that these two firms interact repeatedly each year to either launch or not launch an advertisement campaign. In other words, they play the above game repeatedly and indefinitely. Suppose also that both firms use a discount rate of 20% to calculate the NPV of future cash flows. Assume that both firms adopt a 3-period trigger strategy. Under this strategy, in the first period, the firm cooperates (plays "do not advertise"). So long as the rival chose to cooperate in the previous period, the firm continues to cooperate. However, if the rival deviated in the previous period (played "advertise"), then the firm deviates (triggers punishment) by choosing "advertise" for the next three periods, and then in the fourth period re-starts the strategy (by cooperating). 3. (50 points) If both firms follow this strategy indefinitely, what will be the annual payoffs to each firm? What will be each firm accumulated payoff (NPV)? 4. (150 points) Will the adoption of 3-period trigger strategy by both firms constitute a Nash equilibrium? Please show your work and explain your answer. Hint: If you decide to examine a deviation from a strategy, you should assume that the deviator will try to 5. (100 points) Suppose that Firm A, instead, discounts the future at a rate of 50%, while Firm B continues to discount at a rate of 20%. Is the 3-period trigger strategy (played by both firms) a Nash Equilibrium in this case? Explain why your result does or does not change from Part 4. Hint: If you decide to examine a deviation from a strategy, you should assume that the deviator will try to resume "cooperation" as early as possible