Problem
You are the manager of a company that does digital imaging in the medical industry. You and your only competitor are contemplating the purchase of a new three-dimensional imaging device. If only one of you acquires the device, that firm will make $20 million dollars in profits and the competitor will lose $9 million dollars. There is only one of the devices available and another will not be available for the foreseeable future. A salesperson has contacted you and offered to sell you the imaging device for $23 million dollars. If you refuse, the salesperson will contact the rival firm with the same offer.
Should you accept or refuse the offer? Explain why. Writing this decision as a reduced form game may inform your decision making, include the table here if you use one in preparing your answer.