The Walt Disney Company and Universal Studios are both considering building a new theme park in Texas. They both have three viable options as the new location: Dallas, Houston, and San Antonio. The expected profits are provided in the accompanying payoff table.
\
table
[
[
,
\
table
[
[
Universal builds
]
,
[
in Dallas
]
]
,
\
table
[
[
Universal builds
]
,
[
in Houston
]
]
,
\
table
[
[
Universal builds
]
,
[
in San Antonio
]
]
]
,
[
\
table
[
[
Disney builds
]
,
[
in Dallas
]
]
,
\
table
[
[
Disney receives
]
,
[
$
6
billion profit
]
,
[
Universal receives
]
,
[
$
3
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
1
1
billion profit
]
,
[
Universal receives
]
,
[
$
7
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
9
billion profit
]
,
[
Universal receives
]
,
[
$
8
billion profit
]
]
]
,
[
\
table
[
[
Disney builds
]
,
[
in Houston
]
]
,
\
table
[
[
Disney receives
]
,
[
$
1
0
billion profit
]
,
[
Universal receives
]
,
[
$
6
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
7
billion profit
]
,
[
Universal receives
]
,
[
$
2
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
8
billion profit
]
,
[
Universal receives
]
,
[
$
5
billion profit
]
]
]
,
[
Disney builds in San Antonio,
\
table
[
[
Disney receives
]
,
[
$
1
2
billion profit
]
,
[
Universal receives
]
,
[
$
5
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
8
billion profit
]
,
[
Universal receives
]
,
[
$
7
billion profit
]
]
,
\
table
[
[
Disney receives
]
,
[
$
6
billion profit
]
,
[
Universal receives
]
,
[
$
6
billion profit
]
]
]
]
a
.
If Disney and Universal make this decision simultaneously, the Nash equilibrium will be for Disney to build in and Universal to build in b
.
Disney will earn billion if it builds first and billion if it builds second.