Levi Strauss and Wrangler are planning new-generation jeans and must decide on the colors for their products. The possible colors are white, black, and violet. The payoff to each firm depends on the color it chooses and the color chosen by its rival, as the profit matrix shows:

a. Given that the firms move simultaneously, identify any dominant strategies in this game and find any Nash equilibria.
b. Now suppose the firms move sequentially, with Wrangler moving first. Draw a game tree and identify any subgame- perfect Nash equilibria in this sequential- movegame.

  • CreatedNovember 13, 2014
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