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Statement of a problem № m1401

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ABC Inc. and XYZ Co. are the two dominant companies providing chargers, adapters, and other accessories for cell phones. Each of these Silicon Valley companies is developing a new line of smartphone accessories, and each has a choice of technologies to use for these accessories. Each company can choose to focus on older (cheaper) technology, recent (more expensive) technology, or cutting-edge (very expensive) technology. The share each company will gain or lose in the cell-phone accessories market depends on its technology choice and the technology choice of its competitor. The choice in technology investment must be made by each company before its competitor’s choice is revealed. ABC Inc. and XYZ Co. are both led by young, aggressive CEOs; ABC’s CEO is Jack Webster and XYZ is run by Curtis Madsen. The CEOs of ABC and XYZ are each trying to determine the best technology in which to invest. The following tables provide market share values and indifference probability values, p, for both Jack Webster (ABC) and Curtis Madsen (XYZ). Jack and Curtis have identical indifference probability values. Market Share Gain (Loss) ..... Indifference Probability, p 25 .................... — 20 ....................0.85 15 ....................0.70 10 ....................0.58 5 ....................0.45 0 ....................0.35 –5 ....................0.27 –10 ....................0.20 –15 ....................0.12 –20 ....................0.05 –25.................... — The follo

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