The grocery stores Lower and Higher operate in a small town and they are both faced with the question of whether to advertise for more customers. Advertising is expensive and the residents' total food purchases do not affect advertising much. The main purpose of advertising is therefore to attract customers who would otherwise have visited the other store. The daily return of advertising or not illustrating in the game matrix below.

a) Lower and Highers owners have full knowledge of the situation but for unclear reasons they never talk to each other. They thus make the decision to advertise or not independently. What is the Nash equilibrium or Nash equilibriums?

b) Lower and Highers will be active for a long time and may change their choices whether to advertise or not whenever they can. Lowers owner therefore calls you in as a game theory advisor. What strategy do you suggest Lowers uses? Explain the strategy and why you propose it.

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