Two firms, X and Y, are planning to market their new products. Each firm can develop either TV or Laptop. Market research indicates that the resulting profits to each firm for the alternative strategies are given by the following payoff matrix:

A) If both firms make their decisions at the same time and follow maximin (low-risk) strategies, what will the outcome be?

B) Suppose both firms try to maximize profits, but Firm X has a head start in planning, and can commit first. Now what will the outcome be? What will the outcome be if Firm Y has a head start in planning and can commit first?

C) What is the cooperative outcome?

D) Which firm benefits most from the cooperative outcome? How much would that firm need to offer the other?

LAPTOP FIRMY TU TU30,30 160,35 FIRM X /LAPTOP 40,70 20,20