3. Two vendors simultaneously choose a location. Then the customers choose the closest vendor to buy from. The profit for each vendor equals the number of customers that it attracted. Assume that the vendors choose a location from the set {1,2,3,4,5} of natural numbers, viewed as points on a real line, and that at each location there is exactly one customer. For example, for n = 5 there are 5 locations and when the players choose respectively the locations 2 and 5, their payoffs are u(2,5) = 3 and u2(2,5) = 2. When the vendors share a customer, for instance, when they choose respectively the locations 2 and 4, they end up with a fractional payoff, in this case u(2,4) : 2.5 and u2(2,4) 2.5. In general, each vendor's strategy set is Si = {1,2,3,4,5} for i 1, 2. The outcome of IESDS is

3. Two vendors simultaneously choose a location. Then the customers choose the closest vendor to buy from. The profit for each vendor equals the number of customers that it attracted. Assume that the vendors choose a location from the set {1,2,3,4,5} of natural numbers, viewed as points on a real line, and that at each location there is exactly one customer. For example, for n = 5 there are 5 locations and when the players choose respectively the locations 2 and 5, their payoffs are u(2,5) = 3 and u2(2,5) = 2. When the vendors share a customer, for instance, when they choose respectively the locations 2 and 4, they end up with a fractional payoff, in this case u(2,4) : 2.5 and u2(2,4) 2.5. In general, each vendor's strategy set is Si = {1,2,3,4,5} for i 1, 2. The outcome of IESDS is

Microeconomic Theory

12th Edition

ISBN:9781337517942

Author:NICHOLSON

Publisher:NICHOLSON

Chapter8: Game Theory

Section: Chapter Questions

Problem 8.9P

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