P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below. In the equilibrium of this game:
A)both stations will air reality shows.
B)both stations will air sitcoms.
C)QRS-TV will air a sitcom and P-TV will air a reality show.
D)QRS-TV will air a reality show and P-TV will air a sitcom.

Question

P-TV and QRS-TV are trying to decide whether to air a sitcom or a reality show in a given time slot. Viewers like both sitcoms and reality shows, but sitcoms are more expensive to produce than reality shows since real actors need to be hired. QRS-TV makes its decision first, and then P-TV observes that choice before making its decision. Both stations know all of the information in the decision tree below.  In the equilibrium of this game:
A)both stations will air reality shows. 
B)both stations will air sitcoms. 
C)QRS-TV will air a sitcom and P-TV will air a reality show. 
D)QRS-TV will air a reality show and P-TV will air a sitcom.

Quizplus · Accepted Answer

Airing a reality show is P-TV's dominant strategy, and if P-TV is airing a reality show then QRS-TV's highest payoff will come from airing a reality show.

P-TV and QRS-TV Are Trying to Decide Whether to Air