Calculation of dominant strategy.

Refer to the table below to answer the following questions.  All payoffs are in millions of dollars. (Assume this is a simultaneous move, one shot game)

1.Refer to the above table.  Does Boeing have a dominant strategy?  If so what is it?  Does Airbus have a dominant strategy?  If so what is it? (Recall that a dominant strategy is a strategy that results in the highest payoff to a player REGARDLESS of the opponent's action)

2.Is there a unique equilibrium? If so what is it?  If there is no unique equilibrium are there multiple equilibria?  If so what are they? (Recall that an equilibrium in game theory is the outcome in which no player can improve their payoff by unilaterally changing their own strategy, GIVEN the other players' strategies. Here is a Hint: Guess at an equilibrium and then check whether either firm would want to change its action, given the action of the other firm.  Remember that Boeing can change only its own action, which means moving up or down a column, and likewise, Airbus can change only its own action, which means moving back or forth on a row.)

3.Now suppose Airbus is able to move first. What is the equilibrium now?

Attached file(s)

Solution Attachment

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