Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategi corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not ad (No Ad). The payoffs represent net profit in millions.
-If Jet Cruises chooses to Ad and Easy Sail then chooses to Ad, Jet Cruises earns million in net profit and Easy Sail earns million.
A)$4; $3
B)$10; $2
C)$2; $4
D)$5; $2

Question

Jet Cruises wants to prevent Easy Sail from entering the sailboat market. The above game tree illustrates the different strategi corresponding payoffs for the two firms. Both Jet Cruises and Easy Sail have the same strategies of advertising (Ad) or not ad (No Ad). The payoffs represent net profit in millions.
-If Jet Cruises chooses to Ad and Easy Sail then chooses to Ad, Jet Cruises earns million in net profit and Easy Sail earns million.
A)$4; $3 
B)$10; $2 
C)$2; $4 
D)$5; $2

Quizplus · Accepted Answer

In the game tree, Jet Cruises' highest payoff is $4 if they choose to Ad and Easy Sail chooses to Ad as well. Therefore, Jet Cruises should choose to Ad. Since Easy Sail's highest payoff is $4 if Jet Cruises chooses No Ad and they also choose No Ad, Easy Sail should choose to Ad as well in order to prevent their payoff from being reduced to $2. Therefore, the best choice for both firms is to Ad.

Jet Cruises Wants to Prevent Easy Sail from Entering the Sailboat