Question
Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system
Two computer firms, A and B, are planning to market network systems for office information management. Each firm can develop either a fast, high-quality system (High), or a slower, low-quality system (Low). Market research indicates that the resulting profit to each firm for the alternative strategies are given by the payoff matrix
Firm B
High Low
Firm A High: 40, 40 85, 70
Low: 70, 75 15, 5
If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be? The outcome if both firms follow maximin strategies is for
A. Firm A to choose high and Firm B to choose high.
B. Firm A to choose low and Firm B to choose high.
C. Firm A to choose high and Firm B to choose low.
D. Firm A to choose low and Firm B to choose low.
E. none of the above.
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