Wk 7 - Chapter 13 and Chapter 14 Problems

Maintain ads 580m 600m from the above we can deduce

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Maintain ads $580m $600m From the above, we can deduce that Kodak should introduce the Picture CD. If Kodak introduces the Picture CD, then Sony’s best response would be to increase its advertising spends and in return Kodak can follow a moderate pricing policy. With this, Kodak would gain $610m against Sony who would gain $590m. 15. A math graduate student explains to her friend how to approach a group of smart attractive guys who have brought along famous actor Russell Crowe. What should her friend do? Ignore Russell Crowe or fixate on Russell Crowe? Explain the equilibrium reasoning underlying your answer. Student 1 Ignore R.C. Fixate on R.C. No date tonight Date with R.C. (Worse) (Best) No date tonight Date with other guys Ignore R.C. (Worse) (Better) Student 2 Date with other guys No date ever Fixate on R.C. (Better) (Worst) Date with R.C. No date ever (Best) (Worst) Note: Best payoff – date with R.C., Better – date with other guys, Worse – no date tonight, Worst – no date ever with any of these guys.
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Myisha Coleman May 26, 2013 Looking at the above matrix, the two desirable outcomes (pure equilibrium) cells are the one at bottom left and top right. From this, one of the friends should fixate on R.C and the other ignores R.C., so that at least one of them gets the Best Payoff and the other gets the Better Payoff. Therefore, in this situation, both the friends should work together with each other and reach an agreement to get the best outcome and avoid the worst outcomes.
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