Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will engage in product research to innovate their version of the cyberwidget. The payoffs of each firm's strategy are a function of the strategy 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?

Question

Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if they will engage in product research to innovate their version of the cyberwidget. The payoffs of each firm's strategy are a function of the strategy 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?

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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 engage in product research to innovate their version of the cyberwidget. The payoffs of each firm's strategy are a function of the strategy 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?

Two Firms in a Local Market Compete in the Manufacture