Team-work Homework - Assignment Example

Team Work Assignment al Affiliation Babil King   Do not Advertise Advertise Do not Advertise 150,150 80,300Advertise300,80100,1002Collusion in companies is normally explained by desires in achieving the joint maximization within the market instability in the industry. In this case, King and Babil firm ought in arranging strategies by restricting their advertisement process. The advertisement restriction for the two companies: King and Babil involves limiting their products information to the public (Predtetchinski, 2006).

 Both companies will collude in not advertising their products to the people. This is important because no firms can compete against each other because they have the same strategy. When the two companies do not advertise, both King and Babil Company will have a payoff of 150. This payoff is beneficial to the two companies compared to adverting process. BabilKing Do not AdvertiseAdvertiseDo not Advertise150,15080,300Advertise300,80100,1003In the domain strategy, the two companies that is King firm and Babil firm have a dominating choice of not advertising.

Irrespective of the Babil decision, the King company will not take the risk of advertisement, lest King know the secret of the competitor. From the outcomes stipulated on the table, it is evident that high outcomes arise when the two companies decide not to advertise, independently. The two companies felt that rather than getting a payoff of 300 and 80 for their strategy, they feel it better to win 150 rather than making their products available to their public and their competitors. The best outcome for the dominant strategy is when King fails to advertisement, as well as Babil.

 BabilKing Do not AdvertiseAdvertiseDo not Advertise(150,150)80,300Advertise300,80100,1004In Nash equilibrium the two companies use the methods to predict the outcome of another company in the social arts. The payoff functions represent the firm’s preferences over the action profile of the company where the action profile of King and Babil will portray the list of actions. In this strategy, king will have an incentive in shying away from the advertisement after considering Babil options. Neither Babil not King shall have an incremental benefit of changing their motives.

Under this strategy, just like other strategies discussed above, the nash equilibrium will be attained when the companies choose not to advertise their products. The outcome is illustrated as shown in the matrix below BabilKing Do not AdvertiseAdvertiseDo not Advertise150,15080,300Advertise300,80100,100ReferencesPredtetchinski, A. (2006). A general structure theorem for the Nash equilibrium correspondence. Maastricht: METEOR, Maastricht research school of Economics of TEchnology and ORganizations.