For this assignment, you will need to do some online research to begin. During January of 2014, T-Mobile offered to pay the early termination fees of customers switching from AT&T. Two weeks later, AT&T made a similar offer to T-Mobile customers. 1.) As best as you can, find the values involved, e.g., how much are the two companies’ early termination fees? 2.) Formulate this example as a 2×2 game matrix with two players, AT&T and T-Mobile, and two strategies, to pay ETF’s and to not pay ETF’s. 3.) Solve your game for any Nash equilibrium. 4.) Reflect on your findings. How does your equilibrium prediction compare to what happened or is happening between those two firms? Explain. 5.) How has this episode affected competition in the telecom industry? In particular, as of the current time, will AT&T, T-Mobile, or Verizon pay the ETF’s of switching customers? Explain and reflect on this observation. Your submission should consist of 1-2 pages in APA format. What matters for grading is your analysis. Hence, tables, charts, and figures do not count against your page total or your references page. Unless vital to your story, supporting tables, charges, and figures should be relegated to an appendix.
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