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Game Theory Suppose the only two cruise lines serving a particular area of the Caribbean are each considering: offering more annual trips (cruises), buying more ships, or foregoing any kind of expansion (i.e. Do Nothing). Currently, each company earns the same annual profit,
$18
million (\$18M). The matrix below shows potential future annual profits of the cruise-line companies, depending on the action (i.e. strategy) each company chooses. Use the matrix to answer the questions (a. through d.) below. Assume, initially (questions a. through c.), the companies make their decisions simultaneously. In the last question (d.), the companies make their decisions sequentially (see details below). Cruise Liner 2 (CL2) Do Nothing Cruise Liner 1 (CL1) More Trips More Ships a. In the boxes below, enter any dominated strategies for each company. NOTE: Put "none" if a company does not have a dominated strategy. b. In the boxes below, enter any dominant strategies for each company. NOTE: Put "none" if a company does not have a dominant strategy. CL1 CL2 o What ic tha Nach anuilihrium?
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Now, suppose CL2 were able to make its decision before CL1, so that CL1 made its decision after observing the strategy chosen by CL2. d. Under these conditions. what would be the Nash equilibrium?

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