Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit

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Suppose That Expresso And Beantown Are The Only Two Firms That Sell Coffee The Following Payoff Matrix Shows The Profit 1 (78.21 KiB) Viewed 12 times

Suppose That Expresso And Beantown Are The Only Two Firms That Sell Coffee The Following Payoff Matrix Shows The Profit 2 (64.51 KiB) Viewed 12 times

Suppose that Expresso and Beantown are the only two firms that sell coffee. The following payoff matrix shows the profit (in millions of dollars) each company will earn depending on whether or not it advertises: Expresso Beantown Advertise Doesn't Advertise 8,8 Doesn't Advertise 2,15 Advertise 15, 2 11, 11 For example, the upper right cell shows that if Expresso advertises and Beantown doesn't advertise, Expresso will make a profit of $15 million, and Beantown will make a profit of $2 million. Assume this is a simultaneous game and that Expresso and Beantown are both profit-maximizing firms. If Expresso decides to advertise, it will earn a profit of $ advertise. If Expresso decides not to advertise, it will earn a profit of $ advertise. million if Beantown advertises and a profit of $ million if Beantown advertises and profit of $ If Beantown advertises, Expresso makes a higher profit if it chooses If Beantown doesn't advertise, Expresso makes a higher profit if it chooses Suppose that both firms start off not advertising. If the firms act independe Expresso will choose to advertise and Beantown will choose not to to advertise not to advertise million if Beantown does not million Beantown does not es will they end up choosing?
Suppose that both firms start off not advertising. If the firms act independently, what strategies will they end up choosing? O Expresso will choose to advertise and Beantown will choose not to advertise. O Expresso will choose not to advertise and Beantown will choose to advertise. Both firms will choose not to advertise. Both firms will choose to advertise. Again, suppose that both firms start off not advertising. If the firms decide to collude, what strategies will they end up choosing? Expresso will choose to advertise and Beantown will choose not to advertise. O Expresso will choose not to advertise and Beantown will choose to advertise. Both firms will choose to advertise. Both firms will choose not to advertise. It might be easier for Expresso and Beantown to achieve the cooperative outcome of the game if: The payoffs of the game were cut in half It were difficult to monitor whether the other player was advertising The payoffs of the game were doubled The game had repeated trials