game where two food carts locâtéd néxt tô eäch öt are competing many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first and sets its price, the second cart, called Tridip's opens second and sets its price after observing the price set by Ashok's. To keep it simple let's suppose there are three prices possible for both carts: high, medium, low. Using the game tree below, answer the following: a. How many subgames are there in the game tree? b. What is the strategy profile for the players?
game where two food carts locâtéd néxt tô eäch öt are competing many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first and sets its price, the second cart, called Tridip's opens second and sets its price after observing the price set by Ashok's. To keep it simple let's suppose there are three prices possible for both carts: high, medium, low. Using the game tree below, answer the following: a. How many subgames are there in the game tree? b. What is the strategy profile for the players?
Managerial Economics: A Problem Solving Approach
5th Edition
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Chapter15: Strategic Games
Section: Chapter Questions
Problem 9MC
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Question
9.
Transcribed Image Text:Consider a game where two Indian food carts located next to each other are competing for
many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first
and sets its price, the second cart, called Tridip's opens second and sets its price after
observing the price set by Ashok's. To keep it simple let's suppose there are three prices
possible for both carts: high, medium, low. Using the game tree below, answer the
following:
a. How many subgames are there in the game tree?
b. What is the strategy profile for the players?
c. What is the Nash equilibrium?
High
400, 380
Tridip's
Medium
340, 410
Low
230, 330
High
400, 340
High
Tridip's
Medium
Ashok's
Medium
360, 350
Low
210, 360
Low
High
370, 300
39
Tridip's
Medium
350, 260
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