Question 1

The normal form game below summarizes the actions and payoffs of two airline companies, American and United, that compete by choosing quantities simultaneously. All payoffs are in $1,000, and American's appear in the top right of each cell. Consider only pure strategies in this question. That is, disregard mixed strategies where players randomize between actions.

Which of the following alternatives is correct regarding this game?

Group of answer choices

American has one dominant strategy: choose q_A = 64

There are three Nash equilibria: (q_A, q_U) = (96, 48), (48, 96), and (64, 64)

United has one dominated strategy: choose q_U = 96

There are two Nash equilibria: (q_A, q_U) = (64, 64) and (48, 48)

Question 2

The tree form game below summarizes the actions and payoffs of two airline companies, American and United, that compete by choosing quantities sequentially (American moves first). All payoffs are in $1,000, and American's appear on the left of the parentheses.

Which of the following alternatives is correct regarding this game?

Group of answer choices

United has a first-mover advantage

The equilibrium is (q_A, q_U) = (64, 64)

American has a second-mover advantage

The equilibrium is (q_A, q_U) = (96, 48)