In the following games, all payoffs are listed with the row player's payoffs first and the column player's payoffs second.
-Game 8 shows the payoff matrix in terms of profit (in millions of dollars)for two possible strategies: advertise or do not advertise. Suppose that the two companies can legally make a non-binding agreement to not advertise. Based on the payoff matrix shown above, will the two companies honor such an agreement to not advertise?
A)Yes. Both Coke and Pepsi will not advertise.
B)No. Coke will advertise but Pepsi will not.
C)No. Pepsi will advertise but Coke will not.
D)No. Both Coke and Pepsi will advertise.

Question

In the following games, all payoffs are listed with the row player's payoffs first and the column player's payoffs second. 
-Game 8 shows the payoff matrix in terms of profit (in millions of dollars)for two possible strategies: advertise or do not advertise. Suppose that the two companies can legally make a non-binding agreement to not advertise. Based on the payoff matrix shown above, will the two companies honor such an agreement to not advertise?
A)Yes. Both Coke and Pepsi will not advertise. 
B)No. Coke will advertise but Pepsi will not. 
C)No. Pepsi will advertise but Coke will not. 
D)No. Both Coke and Pepsi will advertise.

Quizplus · Accepted Answer

Given the payoff matrix, both companies have an incentive to advertise to maximize their own profit, even if it means breaking the non-binding agreement. This is because advertising can potentially lead to a better payoff regardless of the other company's decision, leading to a situation where both choose to advertise to avoid being at a disadvantage.

In the Following Games, All Payoffs Are Listed with the Row