Question: Consider the payoff table below that shows the percentage increase in market share for Company A for each combination of Company A and Company B

Consider the payoff table below that shows the percentage increase in market share for Company A for each combination of Company A and Company B strategies. Assume that Company B implements a mixed strategy by using strategy b2 with probability 0.5 and strategy b3 with probability 0.5. Company B decides never to use strategy b1. What is the expected payoff to Company A under each of its three strategies? If Company B were to always use the stated mixed strategy probabilities, what would the optimal strategy for Company Abe?

Company B Increase Quantity Extend b2 Advertising Discounts Varranty b3 bi Increase Advertising ai Quantity Discounts az Extend Warranty as CompanyA

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