Dominant Strategies as per Nash Equilibrium - Essay Example

The Nash equilibrium cases found on the matrix table include the intersections AV and DZ, AW and CX, DY and EZ, AZ and CZ, & CY and AY.

From the data provided on Canon and Nikon, the strategies used by both companies are dominant as they provide a perfect fit for both cases. When considering path AX and path BX, show the same strategy which represents a Nash equilibrium for indicating whether the market structure allows the companies to be strategic in fighting for the market.

Extended Matrix 2: Company B will invest in the same market as A from which paths PP shows the most anticipated outcome as it shows two levels of profit generation.
Extended Matrix 3: Once firm B enters and exits the market, the profitability chances collapse simultaneously as the company loses $1,000,000. The only sound approach is considering paths NP and PN (this combination considers neutral risk-taking) as it considers the N =Neutral path in both cases. Extended Matrix 6

c. By choosing to take 7500 and 50% gamble chances of winning between 5000 and 10000, the CEO is considered a risk taker as the cash amount and the expected outcome range only add up to $7500 + 0 = $7500 or $7500 + either $5000 or $10000 = either $12500 or $17500.

a. This would make her return 10,000 without risks and a 50% chance of losing the opportunity to win 7500 or 12500. However, an ideal path from 1 on the above-extended matrix shows that accepting $10000 and taking the 50% gamble chance increases her chances of having 22500 if the gamble paid off. Either way, the taking of cases with decisions whose outcome can result in benefits or no benefits shows that the CEO is a risk lover. Read More