Coalitional_games assignment.docx - Surname 1 Name Instructor Course Date Coalitional games Laura Sheena and Grace three students at DMU are the owners

Coalitional_games assignment.docx - Surname 1 Name...

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Surname 1 Name Instructor Course Date Coalitional games Laura, Sheena, and Grace, three students at DMU, are the owners of the start-up firm LSG in Leicester. They will join forces with two other start-ups, B1 and S2, to expand their portfolio of products and increase their market share. LSG generates a total of £420 in profits on its own, while B1 produces £260 in profits alone and S2 reports £140 in profits. All measures are in thousands. The three firms have collaborated before, generating joint profits of £680 for LSG and B1, for LSG and S2 of £600, and for B1 and S2 were able to make £420 together. After the merger happens, it is estimated that the three firms together will generate a total profit of £1400. Table 1 summarises the profits (v(S)) for each joint venture S. 1. To meet the rationality condition for each firm, how should the £1400 joint profit be split? (5 marks ) Assumption: Each firm has to receive equal or more than they would obtain on their own without the coalition to meet the rationality condition.

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• Spring '16
• Nashry
• Game Theory, English-language films, Coalition government, Firm, coalition, LSG