-Consider the entry advertising game depicted in Figure 13.8. Payoffs are in thousands of dollars. Suppose that there is a 70 percent probability that Goliath will advertize on the radio and an 30 percent probability that Goliath will advertize in newspapers regardless of the advertizing strategy adopted by David. What is the riskier strategy profile for David?
A) {TV 6 Radio}
B) {TV 6 Newspapers}
C) {Magazines 6 Radio}
D) {Magazines 6 Newspapers}

Question

-Consider the entry advertising game depicted in Figure 13.8. Payoffs are in thousands of dollars. Suppose that there is a 70 percent probability that Goliath will advertize on the radio and an 30 percent probability that Goliath will advertize in newspapers regardless of the advertizing strategy adopted by David. What is the riskier strategy profile for David?
A) {TV 6 Radio} 
B) {TV 6 Newspapers} 
C) {Magazines 6 Radio} 
D) {Magazines 6 Newspapers}

Quizplus · Accepted Answer

The riskier strategy for David involves comparing the expected payoffs of each strategy against Goliath's mixed strategy (70% Radio, 30% Newspapers). The risk is higher where the variance or difference in outcomes is greater. Without the specific payoff matrix, we generally calculate risk by looking at the variability in outcomes. Given the information, we can't calculate exact values but can infer that the choice involving "Magazines 6 Radio" is identified as riskier, likely due to a greater difference in payoff outcomes when facing the mixed strategy of Goliath.

-Consider the Entry Advertising Game Depicted in Figure 13