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Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size
Synergy and Dynaco are the only two firms in a specific high-tech industry. They face the following payoff matrix as they decide upon the size of their research budget: Synergy's Decision Large Budget Small Budget Large Budget $30 million, $20 million $70 million, $0 Dynaco's Decision Small Budget $0, $30 million $50 million, $40 million If Synergy believes Dynaco will go with a large budget, it will choose a V budget. If Synergy believes Dynaco will go with a small budget, it will choose a V budget. Therefore, Synergy V a dominant strategy. If Dynaco believes Synergy will go with a large budget, it will choose a V budget. If Dynaco believes Synergy will go with a small budget, it will choose a V budget. Therefore, Dynaco V a dominant strategy. True or False: There is a Nash equilibrium for this scenario. (Hint: Look closely at the definition of Nash equilibrium.) 0 True 0 False
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