Firm A is calculating the expected benefit of investing in a new communications technology standard. There is a 30% probability that Firm B will also invest in the technology, and a 70% probability that Firm B will not invest. If both Firm A and Firm B choose to invest, profits will be $500 for each firm. If neither firm invests, profits will remain at $250 for each firm. If Firm A chooses to invest and Firm B does not invest, Firm As profit is -$100 and Firm Bs profit is $200. If Firm A does not invest and Firm B does invest, Firm As profit is $200 and Firms B profit is -$100. The optimal strategy for Firm A isA is

0 votes
    not to invest.
     either to invest or not invest as there is no clear dominant strategy.
     to invest.
     There is not enough information given to know the optimal strategy for Firm A.
asked Jun 2, 2013 in Economics by anonymous
    

1 Answer

0 votes
not to invest.
answered Jun 3, 2013 by Xyz ~Expert~ (3,650 points)

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