Question
Two radio stations, KOOL and WIR, are deciding the format of their programming. These stations can present CW (Country Western Music) or IM (Industrial Music).
Two radio stations, KOOL and WIR, are deciding the format of their programming. These stations can present CW (Country Western Music) or IM (Industrial Music). The following matrix presents the payments in thousands of dollars and the strategies of the players.
The numbers on A are both 25, B 50(left) AND 30 (upper right), C ARE 30(left) AND 50 (upper right) AND D both are 12.
1. In simultaneous decisions, does Kool have any dominant strategy? Because if? or why not?
2. In simultaneous decisions, does WIRD have any dominant strategy? Because if? or why not?
3. In simultaneous decisions, by the "best response" method is there any Nash equilibrium?
4. In sequential decisions complete the following decision tree (next page) and find the Nash Balance. Decide who plays first, KOOLoWIRD.
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