Question: Consider a strategic interaction between two tech companies: Orange and Airsoft. Both of them have to decide whether to invest in two competing nascent robot technologies: I-bot or N-bot. If both invest in I-bot, Orange gets 400 and Airsoft gets 1000. If both invest in N-bot, then Orange gets 400 and Airsoft gets 700. If Orange invests in I-bot and

EconomicsEconomics questions and answersConsider a strategic interaction between two tech companies:
Orange and Airsoft. Both of them have to decide whether to invest
in two competing nascent robot technologies: I-bot or
N-bot.

If both invest in I-bot, Orange gets 400 and Airsoft gets
1000.
If both invest in N-bot, then Orange gets 400 and Airsoft gets
700.
If Orange invests in I-bot andQuestion: Consider a strategic interaction between two tech companies:
Orange and Airsoft. Both of them have to decide whether to invest
in two competing nascent robot technologies: I-bot or
N-bot.

If both invest in I-bot, Orange gets 400 and Airsoft gets
1000.
If both invest in N-bot, then Orange gets 400 and Airsoft gets
700.
If Orange invests in I-bot and.Consider a strategic interaction between two tech companies:
Orange and Airsoft. Both of them have to decide whether to invest
in two competing nascent robot technologies: I-bot or
N-bot. 

If both invest in I-bot, Orange gets 400 and Airsoft gets
1000. 
If both invest in N-bot, then Orange gets 400 and Airsoft gets
700. 
If Orange invests in I-bot and Airsoft invests in N-bot, Orange
gets 900 and Airsoft gets 600. 
If Orange invests in N-bot and Airsoft invests in I-bot then
their payoffs ae 500 and 600 respectively. 

 
You have been hired by the CEO of Orange to provide her with all
the alternative options with regards to this interaction, including
her best strategic response. 
 

Represent this game in its normal form (played simultaneously),
clearly labelling the 

      players, their strategies
and pay-offs.
 
(b)  Verify that that there is no pure strategy Nash
Equilibrium in this game.
 

What is the maximum profit each company can guarantee from
playing each of their pure strategies?

Find the mixed strategy Nash Equilibrium in this game and
interpret each player’s equilibrium strategy. 

Outline how the CEOs of each company would operationalise this
mixed strategy in order for it to be successful? 

Given that both players are playing according to their mixed
strategies, what is their expected profit? Are the expected profits
higher than the maximum guaranteed profits reported in part
(c)?

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