Use the following to answer questions 10-11:
Table 12.5
-(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _____ cover story and ESPN Magazine will run the _____ cover story.
A) Brett Favre; Brett Favre
B) Brett Favre; Tim Tebow
C) Tim Tebow; Brett Favre
D) Tim Tebow; Tim Tebow

Question

Use the following to answer questions 10-11:
Table 12.5 
-(Table 12.5) Payoffs represent profits in millions of dollars. In a Nash equilibrium, Sports Illustrated will run the _____ cover story and ESPN Magazine will run the _____ cover story.
A) Brett Favre; Brett Favre 
B) Brett Favre; Tim Tebow 
C) Tim Tebow; Brett Favre 
D) Tim Tebow; Tim Tebow

Quizplus · Accepted Answer

In a Nash equilibrium, both Sports Illustrated and ESPN Magazine will choose the cover story that maximizes their profits, given the other's choice. Looking at the payoffs in the table, if Sports Illustrated chooses Brett Favre, then ESPN Magazine will choose Tim Tebow (since they have a higher payoff for Tim Tebow if Sports Illustrated chooses Brett Favre). And if Sports Illustrated chooses Tim Tebow, then ESPN Magazine will still choose Tim Tebow (since they have a higher payoff for Tim Tebow regardless of Sports Illustrated's choice). Therefore, the Nash equilibrium is for Sports Illustrated to run the Tim Tebow cover story and ESPN Magazine to run the Brett Favre cover story.

Use the Following to Answer Questions 10-11