Solution2-updated - Econ 354K Game Theory Solutions to...

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Econ 354K Game Theory Solutions to Problem Set No. 2 1. Draw the firm’s decision tree. Note: A decision node:…a decision node in which there should be actions to choose. Each decision node should have as many branches as actions. e.g. any terminal node is not a decision node. That is, any other nodes except terminal nodes are decision nodes. For this problem, there is no transfer in the Panama Canal. That is, there is no action to choose in the Panama Canal. Thus, “Panama Canal” cannot be a decision node. 2. Calculate the total costs (both transportation costs and transfer costs) of using each possible routing. To minimize total shipping cost per set, the best way is to ship the television sets from Manila to LA and then by truck to New York. Manila (ship) New York 100 Manila (ship) New Orleans (ship) New York 111 Manila (ship) New Orleans (train) New York 99 Manila (ship) New Orleans (truck) New York 105 Manila (ship) Los Angeles (truck) New York 95 Manila (ship) Los Angeles (truck) New Orleans (ship) New York
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Solution2-updated - Econ 354K Game Theory Solutions to...

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