Secure Strategies

Essay

Secure Strategies. Suppose two competitors, McGraw-Hill, Inc., and Pearson, PLC., each face an important strategic decision concerning whether or not they should boost promotion on new product introductions. McGraw-Hill can choose either row in the payoff matrix defined below, whereas Pearson can choose either column. For McGraw-Hill, the choice is either "boost promotion" or "hold promotion constant." For Pearson, the choices are the same. Notice that neither firm can unilaterally choose a given cell in the profit payoff matrix. The ultimate result of this one-shot, simultaneous-move game depends upon the choices made by both competitors. In this payoff matrix, the first number in each cell is the profit payoff to McGraw-Hill; the second number is the profit payoff to Pearson (in billions).