This is a question regarding Game Theory. We are trying find the equilibria, where neither player has incentive to change the outcome. Then we find the equilibria when operation is allowed.

4. Suppose that ABC Builders and XYZ Builders are bidding on a contract for an ofce expansion. The estimated costs of the work are $200,000 for ABC and $220,000 for XYZ. Each company wants to make some prot. Assume that the possible bids are $225,000 and $260,000. The lowest bidder will get the contract; in case of a tie, each company has a 50% chance of wmmng. a) Find all equilibria. b) Is there a solution to this game? In your answer, consider separately the case where the companies can communicate and cooperate (by forming a binding agreement) and the case where they can't cooperate