The Two Largest Auto Manufacturers, Toyota and GM, Have Experimented

question 60

Multiple Choice

The two largest auto manufacturers, Toyota and GM, have experimented with hydrogen powered cars in the past, and they are currently considering the decision to introduce a hydrogen powered car into the commercial automobile market. The payoffs from the possible actions are measured in millions of dollars per year, and the possible outcomes are summarized in the following game matrix:

Suppose the Japanese government provides a $15 million subsidy to Toyota if the company delivers a hydrogen powered auto (regardless of GM's action) . What is the Nash equilibrium based on the subsidized payoffs?

• A) Toyota's dominant strategy is to produce, and GM is deterred and does not produce.
• B) Toyota's dominant strategy is to produce, and GM also produces the electric auto.
• C) The outcome of the game is the same as before, and there are two Nash equilibria - GM produces and Toyota does not produce, or Toyota produces and GM does not produce.
• D) There is no Nash equilibrium in this game.

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Definitions:

Visual Tasks

Activities or assignments designed to be completed or understood through the use of sight.

Sound Localization

Sound localization is the ability to determine the origin of a sound in space, involving auditory processes that help identify direction and distance of sounds.

Presbycusis

Loss of the ability to hear sounds of high frequency.

Sensory Deprivation

The intentional reduction or removal of stimuli from one or more of the senses, often used for relaxation, meditation, or in psychological experiments.