game theory q

game theory q - UBC Comm 295 Game Theory Practice Questions...

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UBC Comm 295 Game Theory Practice Questions Q 1. Two firms at the St. Louis airport have franchises to carry passengers to and from hotels in downtown St. Louis. These two firms, Metro Limo and Urban Limo, operate nine passenger vans. These duopolists cannot compete with price, but they can compete through advertising. Their payoff matrix is as shown below: United Limo Advertise Don’t Advertise Metro Limo Advertise 25, 15 30, 0 Don’t Advertise 15, 20 40, 5 (a) Does each firm have a dominant strategy? If so, explain and what that strategy is. (b) What is the Nash equilibrium of this game? Explain where the Nash equilibrium occurs in the payoff matrix. Q.2 Two competing music retail stores, Sharp and Flat, offer adult piano lessons in a small city. Because of a strange city bylaw, both Sharp and Flat are required to charge a per-person fee of $20 over and above their cost of offering the lesson. Each store must choose whether or not to promote their piano lessons. Without any promotion, a total of
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game theory q - UBC Comm 295 Game Theory Practice Questions...

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