Answer:
Explanation:
Synergy's Choices Large Budget Small Budget Dynaco's Choices Large Budget $20 million, $25 million $15 million, $0 Small Budget $0, $60 million $25 million, $30 million If Synergy assumes
If Synergy presumes Dynaco will opt for a large budget, then Synergy should also select a large budget.
If Synergy thinks Dynaco will choose a small budget, Synergy should still go for a large budget.
This indicates that Synergy indeed has a dominant strategy.
If Dynaco believes Synergy will pursue a large budget, it will likewise pursue a large budget.
Conversely, if Dynaco believes that Synergy will choose a small budget, it will choose a small budget as well.
Therefore, Dynaco lacks a dominant strategy.
Correctly stated, the Nash equilibrium is found at (large budget, large budget).