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nakungth nakungth
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6 years ago
Two firms in a local market compete in the manufacture of cyberwidgets.  Each firm must decide if they will engage in product research to innovate their version of the cyberwidget.  The pay-offs of each firm's strategy is a function of the strategy of their competitor as well.  The pay-off matrix is presented below.



Firm #2 chooses to innovate with probability 20/21.  If Firm #1 does the same, what is the expected pay-off?  Is this a Mixed Strategy Nash Equilibrium?  Suppose, instead, that firm #2 innovates with probability 2/3.  Should player #1 always innovate?
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Microeconomics

Microeconomics


Edition: 8th
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boransalboransal
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6 years ago
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nakungth Author
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6 years ago
Thank you, thank you, thank you!
DAGINC
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Yesterday
Helped a lot
tcat
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2 hours ago
Smart ... Thanks!
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