Solving a Game when Players Are Rational 63
TABLE 3.2 SPENDING 15 IS A DOMINANT STRATEGY FOR PM
RJR PM Payoff PM Payoff PM Payoff Strategy from 15 from 10 from 5
Spend 5 60 > 57 > 45
Spend 10 45 > 40 > 28
Spend 15 35 > 30 > 20
FIGURE 3.5 Cigarette Advertising Game When TV and Radio Commercials Are Excluded
45,45 28,57
57,28 40,40 Philip Morris
R. J. Reynolds
Spend 5
Spend 10
Spend 5 Spend 10
Of course, there’s nothing wrong with that if that is indeed what happened, since the objective of the ban was to reduce smoking, not lower companies’ profits.
A rational player never smokes cigarettes. (Okay, I’m making that one up.)