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Answer to Question #52969 in Microeconomics for Yana

Question #52969
FIRM A
Concede that Argue that there is no evidence
smoke causes cancer that it causes cancer
Concede that Firm A profits: - $20 bill. Firm A profits: -$50 bill.
smoke causes cancer Firm B profits: -$20 bill. Firm B profits: -$10 bill.

FIRM B Argue that there is Firm A profits: -$10 bill. Firm A profits: -$15 bill.
no evidence that Firm B profits: -$50 bill. Firm B profits: -$15 bill.
it causes cancer
When this game reaches a Nash equilibrium, profits for Firm A and Firm B will respectively be?
Expert's answer
FIRM A
Firm A profits: - $20 bill. Firm A profits: -$50 bill.
smoke causes cancer Firm B profits: -$20 bill. Firm B profits: -$10 bill.
FIRM B Argue that there is Firm A profits: -$10 bill. Firm A profits: -$15 bill.
no evidence that Firm B profits: -$50 bill. Firm B profits: -$15 bill.
When this game reaches a Nash equilibrium, profits for Firm A and Firm B will respectively be -$20 bill and -$15 bill.

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