Suppose AMD Is Considering Cloning Intel's Latest CPU Chip

question 12

Multiple Choice

Suppose AMD is considering cloning Intel's latest CPU chip. If AMD enters Intel's market, Intel can play Mean, expand its output, drop prices, and try to make AMD's profit as small as possible or play Nice by cutting back its output and sharing the market. AMD and Intel both know that after all moves are complete, the time-discounted profits of future chip production in billions of dollars are Intel
Assuming AMD moves first, which of the following is the Nash equilibrium for sequential play?

• A) (Out, Mean)
• B) (In, Nice)
• C) (In, Mean)
• D) (Out, Nice)

---

Definitions:

Early Majority

A segment of consumers in the technology adoption lifecycle that adopts new products after a cautious review, following the innovators and early adopters.

Product Design

The process of envisioning and planning the creation of objects, systems, or services that solve specific problems or meet particular needs.

Test Marketing

A strategy used by companies to evaluate the viability of a new product or service in a smaller, controlled market before a wider release.

Marketing Strategy

A comprehensive plan formulated by a business to achieve specific marketing objectives, such as increasing brand awareness or sales.