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The Following Matrix Shows the Payoffs for an Advertising Game

Question 5

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The following matrix shows the payoffs for an advertising game between Coke and Pepsi.The firms can choose to advertise or to not advertise.Numbers in the matrix represent profits; the first number in each cell is the payoff to Coke.(Numbers in millions.)
 Coke (rows) / Pepsi (columns) Advertise Don’t Advertise Advertise(10,10)(50,500)Don’t Advertise(500,50)(100,100)\begin{array}{c}\begin{array}{|l|}\hline \text { Coke (rows) / Pepsi}\\ \text { (columns)}\\\hline \text { Advertise}\\\hline \text { Don't Advertise}\\\hline \end{array}\begin{array}{l|}\hline\\ \text { Advertise}\\\hline(10,10)\\\hline(-50,500)\\\hline\end{array}\begin{array}{l|}\hline \\\text {Don't Advertise}\\\hline (500,-50)\\\hline (100,100)\\\hline \end{array}\end{array}
a.Explain why this would be described as a Prisoner's Dilemma game.
b.Explain the probable outcome of this game.

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a.The joint profit-maximizing outcome is...

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