Answer to Question #27350 in Microeconomics for Brian

Question

Nokia and Ericsson plan to introduce new handheld communications devices. However, they must decide whether to use their own software standard or a common third-party-developed standard. The respective payoffs are diagrammed below.

a. Does either company have a dominant strategy?

b. Identify the Nash equilibrium (remember that there could be none, one, or more than one).

c. Is this a “prisoners’ dilemma game”? Explain why or why not.