ysoto_deliverable6_113019.pptx - C O NS TR U C T AND ANA LYZ E A G AM E T R EE Deliverable6 By Yajiara Soto FABRIKAM Upgrade Customer Buy(2 2 Don’t

ysoto_deliverable6_113019.pptx - C O NS TR U C T AND ANA...

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FAB RIKAM CONSTRUCT AND ANALYZE A GAME TREE D e l i v e r a b l e 6 B y : Y a j i a r a S o t o
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FAB RIKAM Customer Telecom Company Buy Don’t Buy Upgrade (2, 2) (0, 1) Don’t Upgrade (3, 0) (1, 1) In this game we should use a game tree instead of a payoff matrix because it is a sequential move game as opposed to a simultaneous move game. The player who will go first is Telecom company 1. They have to decide whether or not they should upgrade the new market before the customer would decide if they would buy or not.
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FAB RIKAM Company 1 Customer Customer Upgrade Don’t Buy Buy Buy Don’t Buy (2,2) (0,1) (3,0) (1,1) The non-credible threat of this game would be (Don’t Buy, Buy) because if Telecom Company chooses not to buy into the new market, there would be nothing for the customer to buy.
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FAB RIKAM 4 Company 1 Customer Customer Upgrade Don’t Buy Buy Don’t Buy Don’t Buy (2,2) (0,1) (1,1) The first step of backwards induction would be to analyze the customers choice when Telecom chooses upgrade, since this is the only place where the customer even has a
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Unformatted text preview: choice to consider and backwards induction starts with the player who moves second and their choices. FAB RIKAM 5 Company 1 Customer Customer Upgrade Don’t Buy Buy Don’t Buy Don’t Buy (2, 2 ) (0, 1 ) (1,1) The customer would choose Buy if Telecom chooses upgrade. The customer chooses Buy over Don’t Buy as it has the better outcome of 2 compared to 1. FAB RIKAM 6 Company 1 Customer Customer Upgrade Don’t Buy Buy Don’t Buy (2, 2 ) (1,1) The next step of backwards induction will move up to the player who goes first since we know what the player who moves second will do based on either choice of the first move player. FAB RIKAM 7 Company 1 Customer Customer Upgrade Buy Don’t Buy ( 2 ,2) ( 1 ,1) Telecom company would choose upgrade for a payoff of 2 opposed to Don’t Buy for a payout of 1. FAB RIKAM 8 Company 1 Customer Upgrade Buy (2,2) Telecom company would choose upgrade for a payoff of 2 opposed to Don’t Buy for a payout of 1....
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  • Fall '18
  • Melinda Whitman

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