Suppose Firm A and Firm B are considering whether to invest in a new production technology. For each firm, the payoff to investing (given in thousands of dollars per day) depends upon whether the other firm invests, as shown in the payoff matrix below. What is the Nash equilibrium of this game?
A)Firm A invests, and Firm B doesn't invest.
B)Firm A doesn't invest, and Firm B invests.
C)Firm A doesn't invest, and Firm B doesn't invest.
D)Firm A invests, and Firm B invests.

Question

Suppose Firm A and Firm B are considering whether to invest in a new production technology. For each firm, the payoff to investing (given in thousands of dollars per day) depends upon whether the other firm invests, as shown in the payoff matrix below.  What is the Nash equilibrium of this game?
A)Firm A invests, and Firm B doesn't invest. 
B)Firm A doesn't invest, and Firm B invests. 
C)Firm A doesn't invest, and Firm B doesn't invest. 
D)Firm A invests, and Firm B invests.

Quizplus · Accepted Answer

The Answer of Suppose Firm A and Firm B are considering whether to invest in a new production technology. For each firm, the payoff to investing (given in thousands of dollars per day) depends upon whether the other firm invests, as shown in the payoff matrix below.  What is the Nash equilibrium of this game?
A)Firm A invests, and Firm B doesn't invest. 
B)Firm A doesn't invest, and Firm B invests. 
C)Firm A doesn't invest, and Firm B doesn't invest. 
D)Firm A invests, and Firm B invests.

Suppose Firm a and Firm B Are Considering Whether to Invest