Refer to Figure 9.4. The payoffs to each firm (in billions) are listed on the following diagram and an extensive form game between BP and Shell. BP has 20% of the U.S. gasoline market share and Shell has 16% market share. BP and Shell are attempting to determine whether to send geologists to explore Oil Track 20.Is there a dominant strategy for Shell? What is the dominant strategy, if any, for Shell?What is the Nash equilibrium or equilibria in this game?What is a first-mover advantage? Does BP have a first-mover advantage in this game?Use the above information to advise BP on whether they should pursue a merger with Shell.
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