Roland's Barber Shop and Charley's Barber Shop are both located in the business district of a certain town. Roland estimates that if he raises the price of a haircut by $1, he will increase his market share by 6% if Charley raises his price by the same amount; he will decrease his market share by 1% if Charley holds his price at the same level; and he will decrease his market share by 2% if Charley lowers his price by $1. If Roland keeps his price the same, he will increase his market share by 4% if Charley raises his price by $1; he will keep the same market share if Charley holds the price at the same level; and he will decrease his market share by 3% if Charley lowers his price by $1. Finally, if Roland lowers the price he charges by $1, his market share will increase by 5% if Charley raises his prices by the same amount; he will increase his market share by 3% if Charley holds his price at the same level; and he will increase his market share by 2% if Charley lowers his price by $1. (a) Construct the payoff matrix for this game. (Enter the values as integer percents. So 1% would be entered as 1.) Charley raise hold lower Roland raise hold lower
Roland's Barber Shop and Charley's Barber Shop are both located in the business district of a certain town. Roland estimates that if he raises the price of a haircut by $1, he will increase his market share by 6% if Charley raises his price by the same amount; he will decrease his market share by 1% if Charley holds his price at the same level; and he will decrease his market share by 2% if Charley lowers his price by $1. If Roland keeps his price the same, he will increase his market share by 4% if Charley raises his price by $1; he will keep the same market share if Charley holds the price at the same level; and he will decrease his market share by 3% if Charley lowers his price by $1. Finally, if Roland lowers the price he charges by $1, his market share will increase by 5% if Charley raises his prices by the same amount; he will increase his market share by 3% if Charley holds his price at the same level; and he will increase his market share by 2% if Charley lowers his price by $1.
| Charley | |||||||||||||||||||||||||||||
| raise hold lower | |||||||||||||||||||||||||||||
| Roland | raise hold lower |
|
To Determine:
To construct the payoff matrix for this game.
Trending now
This is a popular solution!
Step by step
Solved in 3 steps
