Question

The following payoff matrix describes the increase in market share for L.G Company and decrease in market share for Samsung Company: 

Company 

L.G

Samsung 

Strategy 

Low advt. 

High advt.

Low advt. 

4 

-6

High advt. 

-12 

-10

 

By using Games theory, answer the following points: ∙ Game strategy is considered as: 

∙ Saddle point will be: 

∙ Game value will be: 

∙ Game result is for: 

Answer 1

Payoff matrix:

A saddle point if the outcome is a minimum in its row and maximum in its column.

So, saddle point is -10.

Game value: the increase in market share.

Game result: The row and column that the saddle point belongs to are the best strategies for the players. So, L.G Company and  Samsung Company should always play High advt.