Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions.
-The Nash equilibrium of this game is for Happy Feet to and Best Nails to .
A)Ad; No Ad
B)Ad; Ad
C)No Ad; No Ad
D)No Ad; Ad

Question

Happy Feet wants to prevent Best Nails from entering the nail salon market. The above game tree illustrates the different stra and corresponding payoffs for the two firms. Both Happy Feet and Best Nails have the same strategies of advertising (Ad) or advertising (No Ad). The payoffs represent net profit in millions.
-The Nash equilibrium of this game is for Happy Feet to and Best Nails to .
A)Ad; No Ad 
B)Ad; Ad 
C)No Ad; No Ad 
D)No Ad; Ad

Quizplus · Accepted Answer

The Nash equilibrium occurs where neither player has an incentive to deviate from their chosen strategy given their opponent’s chosen strategy. In this game, if Best Nails chooses to advertise, Happy Feet is better off not advertising, as they will have a higher payoff. Similarly, if Best Nails chooses not to advertise, Happy Feet is also better off not advertising. Therefore, the Nash equilibrium is for Happy Feet to not advertise and for Best Nails to advertise, resulting in a payoff of 7 million each. Thus, the best choice for Happy Feet is to choose No Ad, and the best choice for Best Nails is to choose Ad.

Happy Feet Wants to Prevent Best Nails from Entering the Nail