Consider the hypothetical example using game theory. Assume that it is a

one-off simultaneous move game, and that each player only cares about their

own payoff.

LG and Samsung are deciding whether or not to release a new 360-degree

camera.

If both LG and Samsung release the camera, then LG will make $20 million

profit, and Samsung will make $40 million profit.

If LG releases the camera, and Samsung does not, then LG will make $30

million profit and Samsung will make $0 profit.

If LG does not release the camera, and Samsung does, then LG will make

$30 million profit, and Samsung will make $60 million profit.

If neither LG nor Samsung release the camera, they both receive $0 profit.

a) Depict the above outcomes in a payoff matrix. [2 marks]

b) If LG releases the camera, what is Samsung's best response? [1 mark]

c) Does LG have a dominant strategy?

If so, what is it? If not, explain why not. [2 marks]

d) Does Samsung have a dominant strategy?

If so, what is it? If not, explain why not. [2 marks]

e) Find the Nash Equilibrium of the game. [1 mark]

f) Explain why the Nash Equilibrium is a likely outcome for this game.