Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below. Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game? Should the players use a mixed strategy?

Question

Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below.  Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game? Should the players use a mixed strategy?

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The Answer of Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will offer a warranty or not. The payoffs of each firm's strategy are a function of their competitor as well. The payoff matrix is presented below.  Does either player have a dominant strategy? Does the game have any Nash equilibria? What is the maximin strategy of each player in the game? Should the players use a mixed strategy?

Two Firms in a Local Market Compete in the Manufacture