Constructing Pay-Off Matrix on Representing Profits (Math Problem Sample)

Deliverable 03 – Worksheet
1 Market research has determined estimates for each law firm’s expected profits for the various outcomes of this scenario. If both firms agree to the merger, then each should individually expect a profit of 20 million in the next year. If our client agrees to the merger while the competitor does not, our client would expect profits of 7 million in the next year while the competitor would expect profits of 25 million. If the decisions were reversed then the payouts would also be reversed. If neither firm agrees to the merger, then both would expect profits of 15 million in the next year.
Construct a payoff matrix to represent the profits (in millions of dollars) for each firm under the different outcomes.