Your recommendations were very successful So much that the company has hired you to help them decide on other issues they are facing Their success has called the attention of a group of investors we will call H, that will enter the market as soon as they conclude the development of their technology There are two possible strategies for H , they either seek to form their own firm to compete with A, or H looks to merge with A and form a single company You have been asked to design the strategy A will use A has two options as well, either invest on proprietary non compatible technology to strengthen its product and its dominant position in the market, or it can invest in an open compatible technology and make an offer to H to merge the two companies You identify two cases Case 1 A invests in proprietary non compatible technology, and both A and H have two possible strategies merge or compete The payoffs for each firm are the following If A chooses merge and H chooses merge , A gets 6 and H gets 5 If A chooses compete and H chooses merge , A gets 9 and H gets 1 If A chooses merge and H chooses compete , A gets 2 and H gets 8 If A chooses compete and H chooses compete , A gets 3 and H gets 2 Case 2 A invests in open compatible technology, and both A and H have two possible strategies merge or compete If A chooses merge and H chooses merge , A gets 8 and H gets 7 If A chooses compete and H chooses merge , A gets 6 and H gets 2 If A chooses merge and H chooses compete , A gets 3 and H gets 5 If A chooses compete and H chooses compete , A gets 4 and H gets 4 What would you recommend A does, invest in proprietary non compatible technology, or invest in open compatible technology You are going to participate in the negotiations between firms A and H, how would you sell the best outcome to both firms Justify your answer using a suitable framework and support your arguments with the appropriate analysis, intuition, and calculations (25 marks) (this question is 25 marks so you need to include the explanation of cooperative, non coopertaive games, Nash equilibrium and dominant strategies when answering this question)

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Your recommendations were very successful. So much that the company has hired you to help them decide on other issues they are facing. Their success

Your recommendations were very successful. So much that the company has hired you to help them decide on other issues they are facing. Their success has called the attention of a group of investors we will call H, that will enter the market as soon as they conclude the development of their technology. There are two possible strategies for H, they either seek to form their own firm to compete with A,or Hlooks to merge with Aand form a single company. You have been asked to design the strategy Awill use. A has two options as well, either invest on proprietary non-compatible technology to strengthen its product and its dominant position in the market, or it can invest in an open compatible technology and make an offer to H to merge the two companies.

You identify two cases:

Case 1: A invests in proprietary non-compatible technology, and both A and H have two possible strategies: merge or compete. The payoffs for each firm are the following

If A chooses merge and H chooses merge, A gets 6 and H gets 5
If A chooses compete and H chooses merge, A gets 9 and H gets 1
If A chooses merge and H chooses compete, A gets 2 and H gets 8
If A chooses compete and H chooses compete, A gets 3 and H gets 2

Case 2: A invests in open compatible technology, and both A and H have two possible strategies: merge or compete

If A chooses merge and H chooses merge, A gets 8 and H gets 7
If A chooses compete and H chooses merge, A gets 6 and H gets 2
If A chooses merge and H chooses compete, A gets 3 and H gets 5
If A chooses compete and H chooses compete, A gets 4 and H gets 4

What would you recommend A does, invest in proprietary non-compatible technology, or invest in open compatible technology? You are going to participate in the negotiations between firms A and H, how would you sell the best outcome to both firms? Justify your answer using a suitable framework and support your arguments with the appropriate analysis, intuition, and calculations. (25 marks)

(this question is 25 marks so you need to include the explanation of cooperative, non-coopertaive games, Nash equilibrium and dominant strategies when answering this question)