Suppose AMD is considering cloning Intel's latest CPU chip. If AMD enters Intel's market, Intel can play Mean, expand its output, drop prices, and try to make AMD's profit as small as possible or play Nice by cutting back its output and sharing the market. AMD and Intel both know that after all moves are complete, the time-discounted profits of future chip production in billions of dollars are Intel
Assuming AMD moves first, which of the following is the Nash equilibrium for sequential play?
A) (Out, Mean)
B) (In, Nice)
C) (In, Mean)
D) (Out, Nice)

Question

Suppose AMD is considering cloning Intel's latest CPU chip. If AMD enters Intel's market, Intel can play Mean, expand its output, drop prices, and try to make AMD's profit as small as possible or play Nice by cutting back its output and sharing the market. AMD and Intel both know that after all moves are complete, the time-discounted profits of future chip production in billions of dollars are Intel
 Assuming AMD moves first, which of the following is the Nash equilibrium for sequential play?
A) (Out, Mean) 
B) (In, Nice) 
C) (In, Mean) 
D) (Out, Nice)

Quizplus · Accepted Answer

The Answer of Suppose AMD is considering cloning Intel's latest CPU chip. If AMD enters Intel's market, Intel can play Mean, expand its output, drop prices, and try to make AMD's profit as small as possible or play Nice by cutting back its output and sharing the market. AMD and Intel both know that after all moves are complete, the time-discounted profits of future chip production in billions of dollars are Intel
 Assuming AMD moves first, which of the following is the Nash equilibrium for sequential play?
A) (Out, Mean) 
B) (In, Nice) 
C) (In, Mean) 
D) (Out, Nice)

Suppose AMD Is Considering Cloning Intel's Latest CPU Chip