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QUESTION

Apple and Samsung repeatedly play the following simultaneous-move Email Game. If both email their customers about their new smart phones, each earns...

Apple and Samsung repeatedly play the following simultaneous-move Email Game. If both email their customers about their new smart phones, each earns profits of $5 million. If neither company emails their customers, each earns profits of $10 million. If one sends emails about their new smart phones and the other does not, the company that emails earns $15 million and the other company gets $1 million.

a. Draw the decision matrix for this game.

b. If there is a 50 percent chance that Amazon.com buys both companies in any given year (i.e. the game ends), can Apple and Samsung "collude" by agreeing not to email their customers?

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