Use the table below to answer the following questions.
Table 14.2.5
-Refer to Table 14.2.5.Two software firms have developed an identical new software application.They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy.The payoff matrix is above and the payoffs are profits in millions of dollars.What is Firm 1's best strategy?
A)Give away the application regardless of what Firm 2 does.
B)Sell the application at $30 a copy regardless of what Firm 2 does.
C)Give away the application only if Firm 2 sells the application.
D)Give away the application only if Firm 2 gives away the application.
E)Sell the application only if Firm 2 sells the application.

Question

Use the table below to answer the following questions.
Table 14.2.5 
-Refer to Table 14.2.5.Two software firms have developed an identical new software application.They are debating whether to give the new application away free and then sell add-ons or sell the application at $30 a copy.The payoff matrix is above and the payoffs are profits in millions of dollars.What is Firm 1's best strategy?
A)Give away the application regardless of what Firm 2 does. 
B)Sell the application at $30 a copy regardless of what Firm 2 does. 
C)Give away the application only if Firm 2 sells the application. 
D)Give away the application only if Firm 2 gives away the application. 
E)Sell the application only if Firm 2 sells the application.

Quizplus · Accepted Answer

Without the specific payoff matrix provided, the general principle in game theory suggests that Firm 1's best strategy would be the one that maximizes its profit regardless of Firm 2's actions. If the option states Firm 1 should "give away the application regardless of what Firm 2 does," it implies this strategy ensures the highest or equal profit in all possible scenarios compared to other strategies.

Use the Table Below to Answer the Following Questions