Question
Two magazines, MacLean's and Time, are competing for readers.Through market research, they have learned that 70% of magazine readers are interested in Donald Trump, and
Two magazines, MacLean's and Time, are competing for readers.Through market research, they have learned that 70% of magazine readers are interested in Donald Trump, and the other 30% are interested in Justin Trudeau.Each magazine has the option of putting one or the other on the cover of their magazine.If they each choose the same person, they split the readership.
The table below illustrates the payoff matrix for these two magazines.
MacLean's Decision
Donald Trump cover
Justin Trudeau cover
Time's Decision
Donald Trump cover
Time readership: 35%
MacLean's readership: 35%
Time readership: 70%
MacLean's readership: 30%
Justin Trudeau cover
Time readership: 30%
MacLean's readership: 70%
Time readership: 15%
MacLean's readership: 15%
a) What is the cooperative outcome in this game? (1 mark)
b) What is MacLean's best decision?Does it depend on Time's decision? (1 mark)
c) What is Time's best decision? Does it depend on MacLean's decision? (1 mark)
d) What is the non-cooperative outcome in this game? (1 mark)
e) What is the Nash equilibrium in this game?Explain how you arrived at this conclusion. (3 marks)
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