Analyzing the expected profits of two firms Assignment

Analyzing the expected profits of two hards - engagement ExampleThrough illustration, when the two companies decide in applying this strategy their equilibrium will beIn this scenario, King Company and Babil Company both have a dominant option of advertising. No affaire what Babil does, King Company will improve his promotion by advertising and vice-versa. However, something odd about the back up it seems that the two companies will benefit more when they choose non to crowd. Instead of one gaining 300 and the other losing 80 and vice-versa, they could win 150 each. Therefore, the rational choice of mutual not advertising has a dangerous flavor that is puzzling.In game theory concept the optimal outcome of the two firms is where no firm has incentives in deviating from the set advertisement strategies after the choice of the opponent is considered. Overall, no firm can pull in an incremental benefit of altering actions, assuming the firms remain similar in the strategies. Th e Nash equilibrium will exists when no firm change their advertisement strategy, despite understanding the opponents strategy. Logically the two companies choose not to advertise and receive payoff of 150. If a person reveals the strategy of King to Babil and vice-versa, no firm will influence from not advertising. Knowing the move of King, and do not change the behavior of the Babil, the outcome of the two companies not advertising represent the Nash