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Part E: Exercises [2ft marks] Answer both questions B1 and BE. Make sure to sufciently explain your answers and to show appropriate working. lli'tuestion B1
Part E: Exercises [2ft marks] Answer both questions B1 and BE. Make sure to sufciently explain your answers and to show appropriate working. lli'tuestion B1 [10 marks] llllonsider the hypothetical example using game theory. Assume that it is a one-off simultaneous moye game, and that each player only cares about their own payoff. LG and Samsung are deciding whether or not to release a new BEDdegree camera. If both LG and Samsung release the camera, then LG will make $213 million prot, and Samsung will make $413 million prot. It LG releases the camera, and Samsung does not, then LG will make $33 million prot and Samsung will make $0 prot. If LG does not release the camera, and Samsung does, then LG will make $313 million prot, and Samsung will make $ million prot. It neither LG nor Samsung release the camera, they both receiye $ prot. a} Depict the above outcomes in a payoff matrix. [2 marks] b} It LG releases the camera, what is Samsung's best response? [1 mark] c} Does LG have a dominant strategy? It so, what is it? If not, explain why not. [2 marks] d} Does Samsung have a dominant strategy? If so, what is it? If not, explain why not. [2 marks] e} Find the Nash Equilibrium of the game. [1 mark] 1') Explain why the Nash Equilibrium is a likely outcome for this game. [2 marks]
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