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Chapter 12 Problem #7 Hint: Draw the pay-off matrix for this problem. 7. Netflix and Hulu compete in offering streamed content subscriptions. Both companies are considering whether to offer an initially discounted subscription to attract new customers. Their payoffs depend as follows on the combinations of strategies chosen: If both companies offer discounted subscriptions, then each company loses $8 million. If Netflix offers a discounted subscription and Hulu does not, then Netflix makes a profit of $15 million and Hulu suffers a loss of $12 million. If Hulu offers a discounted subscription and Netflix does not, then Hulu makes a profit of $5 million and Netflix suffers a loss of $6 million. If neither company offers an initially discounted subscription, each makes a profit of $6 million. Which of following statements is true? (LO2, LO3, LO4) a. The dominant strategy for Netflix is to offer a discounted subscription. b. Only one Nash equilibrium pair of strategies exists. c. If Netflix offers an initially discounted subscription. the best strategy for Hulu is not to offer a such a discounted service. d. This game is a prisoner's dilemma. e. None of the above statements are true