The market leader BestGames is releasing its new game for Christmas. Worried about the competition, both Game4U and All4Games decide to commercialise their games in October or March. They face the payoff matrix below, where a is an integer.
Payoffs (Game4U, All4Games) In £10,000 .AII4Gamers October March Game4U October a,a 100,50 March 50,100 -25,-25
a. For what values of a is (October, October) a dominant strategy equilibrium —i.e. a Nash equilibrium reached through iterated elimination of dominated strategies? b. For what values of a is (March, March) a dominant strategy equilibrium? c. Find the (pure strategy) Nash equilibria of the game as a function of parameter a? Explain your answer.
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