Question 2. (8 points) Airbus and Boeing have two possible actions each: keep producing the current (\"Old\") aircraft models or introduce the new (\"New\") ones. The old models are welltested, and known to be safe. The new models can either be good (safe) or bad ( prone to air crashes). Assume that the quality of the new models is the same for Airbus and Boeing (i.e., either both are good, or both are bad). If the new model is good Airbus and Boeing strategies and payoff matrix are given by the following table: Boeing -- Airbus The strategic form of the game reects the fact that switching from the old model to the new one is costly and makes sense only if the other company keeps producing the old model. In that case, the company that introduces the new model, grabs part of the market of the com- petitor. Switching to the new models simultaneously is not protable, because the companies have to split prots. If the new model is bad Airbus and Boeing strategies and payoff matrix are given by the following table: Boeing -- Airbus 1, 4 1, 1 New The strategic form of the game reects the fact that if the new model is bad, the company that produced it experiences a loss. If the other company keeps producing the old model, it gets part of the market of the competitor. Airbus and Boeing choose their actions simultaneously. (a) Describe all (if any) pure strategies Nash equilibria in the case when the new model is good. (b) Describe all (if any) pure strategies Nash equilibria in the case when the new model is bad. ((2) Suppose that the quality of the new model is not known. Let 11' 6 (0,1) denote the probability of the event that the new model is good. Write down the strategic form of the game for this case and analyze how pure strategies Nash equilibria depend on the value of 71'. (d) Let 71' = 0.9. If Airbus and Boeing are allowed to randomize their behavior, what will be the equilibrium strategies and payoffs