Nintendo and Sony Playstation Are Each Planning to Introduce One

question 43

Essay

Nintendo and Sony Playstation are each planning to introduce one new game into the market. Each is considering three different kinds of games: an urban action game like Grand Theft Auto, an adventure game like Tomb Raiders, or a strategy game like Sim City. The table shows each firm's profits (Sony's profit first) in millions of dollars:
(a) Assuming the firms act independently, find the equilibrium outcome. Briefly, explain your answer. Is this game an example of the prisoner's dilemma?
(b) Nintendo knows for a fact that Sony will not decide on its new project for four months As CEO of Nintendo, what would you do immediately based on the analysis above?
(c) If the firms were free to coordinate their decisions, what agreement (and actions) would they take? Explain briefly.

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Definitions:

Cataracts

A medical condition characterized by the clouding of the eye's natural lens, leading to decreased vision.

Tonometer

An instrument for determining pressure or tension, especially determining ocular tension.

Retinoscope

An instrument used by eye doctors to shine a light into the patient's eye to observe the reflection from the retina, helping to determine the patient's prescription for glasses or contact lenses.

Ophthalmoscope

A hand-held instrument with a light; used to view inner eye structures.