Both Google and Bing (Microsoft) are considering how many ads to display for a given search. Search engine users like when a search is fast and accurate, but they do not like ads throughout the web page. However, advertisers want their ads displayed on the most highly used search engine. The search engines have two choices given their search algorithm; they can have many ads or few adds. Because Google has a faster and more accurate search algorithm, if both Bing and Google have low number of ads Google earns $4 million in profit and Bing earns $3 million. If Bing has a high number of ads and Google has a low number of ads, Bing loses customers to Google and earns $2 million while Google earns $5 million. If Google has a high number of ads and Bing has a low number of ads, Bing gains some market share and earns $5 million, but, because Google is still fast and accurate, it earns $3 million dollars. If both companies have a high number of ads Bing earns $4 million and Google earns $6 million.

A) Represent this as a one shot game using a payoff metric and circle the best responses for each company.

B) Do Google or Bing have a dominant strategy? If so, give the dominant strategy.

C) Is there a Nash equilibrium? If so, give the Nash equilibrium.