Refer to the payoff matrix below

Assuming this is a sequential game with no collusion, what is the outcome if Firm A moves first to build a new type of commercial aircraft? Explain why first-mover strategies in the realworld are only as good as the profit projections on which they are based. How could a supposed “win” from moving first turn out to be a big loss, whereas the “loss” of being preempted turn out to be a blessing in disguise?

Transcribed Image Text:

Firm A Build aircraft Don't build A$10 0 tit $10 $25 c $25 0 CD 0 0