Question

Submit All Questions Completed 4 out of O o 01 ธ7 .0: Resources Save Arswer Press Esc to ext full screen Question & of 40> Suppooe Nike and Adidas are considering whether to develop new advertining campaigss. For each pair of stre tegies, the blue trisgle howe Nispay and the yellow triangle abone' eyof.billoas. Use thiz iaformaoc complete the sentences The best ostcome for Nike is to choose Nike's choices and for Adidas to Advertise Do not advertise choope S6b $3b IE Adidas chooses sot to advertise, their best Advertise reault will happes if Nike chooses $14b Sob The Nash equilbrtam for this advertising game is $148 $10b for Nike to choose Do not advertise-$3b and for Adidas S10b Backspace

Answer 1

The best outcome for Nike is to choose to Advertise and for Adidas to choose to Advertise.

The reason being that the payoffs are higher for Nike in Advertise than in Do not Advertise, irrespective of Adidas's choice, and the payoffs are higher for Adidas in Advertise than in Do not Advertise, irrespective of what Nike's choice.

If Adidas chooses not to advertise, their best result will happen if Nike chooses Not to Advertise. In case Adidas chooses not to advertise and Nike chooses to advertise, Adidas makes -$3b, while with same choice of Adidas and Nike choosing Do not advertise, Adidas makes $10b.

The Nash equilibrium for this advertising game is for Nike to choose to Advertise and for Adidas to Advertise.

The reason being that the choice of Advertise for both firm is a dominant one. This means that both of the firms would eventually choose to advertise.