Answer Happy

3 Christopher is deciding whether to enter (E) or to not enter (N) the market for ice cream, currently monopolized by Laury's Ice cream Laury is making $20 million in profits currently, whereas Christopher is making zero pronts on the sidelines Thus, ir Chris does not enter then the game ends for payoffs (0,20) If Christopher enters the market, Laury observes and can either accommodate (A) him and share industry profits equally with Christopher's firm (510 mil each) or fight (F) him and cause a 55 million toss for each - the result of a costly price war that attempts to squeeze the other out of the market. Assume the game is played once . a Suppose they first have to decide what to do simultaneously and soparately in their corporate headquarters Put the same game in a matrix . Now solve for the PSNE . Now, suppose Christopher makes his decision first, then Laury moves, having observed Model the game in extensive form (game tree) .d What is the Backward Induction NE of the game? . What is the difference between this solution and the previous ? • What if Laury - trying to discourage Christopher from entering -- threatened to "always tight"Would this work? Page 2