Question: 1.6 Suppose Procter & Gamble (PG) and Johnson & Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose a high, medium, or

1.6 Suppose Procter & Gamble (PG) and Johnson &

Johnson (JNJ) are simultaneously considering new advertising campaigns. Each firm may choose a high, medium, or low level of advertising. What are each firm’s best responses to its rival’s strategies?

Does either firm have a dominant strategy? What is the Nash equilibrium in this game?

High JNJ Medium 1 Low PG High Medium 2 Low 3 3

High JNJ Medium 1 Low PG High Medium 2 Low 3 3 5 3 4 5 2 4 6 5 6 5 3 5 7

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