Louisiana State University, Shreveport ECON ECON 705 Two law firms compete for most of the market in the small town of…

Louisiana State University, Shreveport ECON ECON 705 Two law firms compete for most of the market in the small town of…

Two law firms compete for most of the market in the small town of Grumbleton, and must choose their advertising levels simultaneously. The following payoff table facing the two firms, Jackie Chiles Law, LLC and Lionel Hutz Law Firm, shows the weekly profit outcomes for the various advertising decision combinations. Use this payoff table to answer the following three questions.

[Blank for Formatting] Hutz Advertising Level: Low Hutz Advertising Level: High Chiles Advertising Level: Low $2500/$2500$1500/$3500 Chiles Advertising Level: High $3500/$1500$2000/$2000

Lionel Hutz Law Firm has

Select one:

a. no dominant strategy since Hutz profits are earned after profits are earned by Chiles.

b. a dominated strategy: never choose a low level of advertising if Chiles chooses high, and never choose a high level of advertising if Chiles chooses low.

c. a dominant strategy: choose a low level of advertising.