In the political campaign advertising game in Section
1.B, party L chooses an advertising budget, x (millions of dollars), and party
R similarly chooses an advertising budget, y (millions of dollars). We showed
there that the best-response rules in that game are for party R and
for party L.
(a) What is party R’s best response if party L spends $16
(b) Use the specified best-response rules to verify that
the Nash equilibrium advertising budgets are x 5 y 5 25, or $25 million.