-Refer to Figure 10.2, which summarizes the payoffs to three aerospace companies that are considering investing $20 billion to develop a new, technologically advanced, commercial jumbo jet airliner for sale in the global marketplace. Payoffs are in billions of dollars. If larger payoffs are preferred, the Nash equilibrium strategy profile for this game is:
I. {Produce, Produce, Produce}.
II. {Don't produce, Produce, Produce}.
III. {Don't produce, Don't produce, Don't produce}.
IV. {Produce, Don't produce, Produce}.
V. {Produce, Produce, Don't produce}.
Which of the following is correct?

Question

Quizplus · Accepted Answer

In a Nash equilibrium, each player's strategy is optimal given the strategies of the other players. Without the specific payoff matrix, we generally look for outcomes where no single company would benefit from unilaterally changing their decision, assuming the decisions of others remain constant. Options II, IV, and V suggest scenarios where at least one company opts not to produce, potentially reflecting strategic decisions to avoid competition or losses when considering the actions of the others.