Consider the war over the new format for high definition video disks discussed in Application 5.3, but
Question:
a. Find the pure-strategy Nash equilibrium or equilibria.
b. Compute the mixed-strategy Nash equilibrium. As part of your answer, draw the best response function diagram for the mixed strategies.
c. Suppose the game is played sequentially, with Sony moving first. What are Toshibas contingent strategies? Write down the normal and extensive forms for the sequential version of the game.
d. Using the normal form for the sequential version of the game, solve for the Nash equilibria.
e. Identify the proper sub games in the extensive form for the sequential version of the game. Use backward induction to solve for the sub game- perfect equilibrium. Explain why the other Nash equilibria of the sequential game areunreasonable.
Step by Step Answer:
Intermediate Microeconomics and Its Application
ISBN: 978-0324599107
11th edition
Authors: walter nicholson, christopher snyder