Question

Suppose only two​ airlines, United and​ Delta, provide flights between Atlanta and KnoxvilleKnoxville. Both firms must choose whether to advertise or not advertise. The advertising strategies with corresponding profits are depicted in the payoff matrix to the right. United​ Airline's profits are in blue and Delta​ Airline's are in red. United​ Airline's dominant strategy is to ▼ not advertise advertise ​, and Delta​ Airline's dominant strategy is to ▼ advertise not advertise . What is the Nash equilibrium for this​ game? A. United and Delta will both choose to advertise. B. United will choose to advertise and Delta will choose not to advertise. C. United and Delta will both choose not to advertise. D. United will choose not to advertise and Delta will choose to advertise.

Answer 1

Option C

Step-by-step explanation:

When Delta Advertises, United best strategy is to Advertise since payoff is higher ($9,000 > $1,000).

When Delta Does not advertise, United best strategy is to Advertise since payoff is higher ($16,000 > $11,000).

When United Advertises, Delta's best strategy is to Advertise since payoff is higher ($9,000 > $1,000).

When United Does not advertise, Delta's best strategy is to Advertise since payoff is higher ($16,000 > $11,000).

Thus, from the above we can conclude that the correct option is C.