Respond to question a,b and c!
Buying any type of product or good is a sequential game in which the owner of the product or good sets the price and then the buyer can buy, not buy, or counter and offer a new price. This can be broken down into the following simple tree diagram:
However, the determination of what Price A and Price B is often a simultaneous game played between two or more competing companies. For example:
Taking this into consideration, imagine you are in charge of ticket sales for Drew University. You are charged with selling tickets to four different groups: (1) High Rollers; (2) Semi-Big Shots; (3) Average People; and (4) Cheapos. You have one other smaller university 60 miles from you (i.e., Muller Institute for Technology) that you are competing with for fans.
1) Describe the strategies would you take in the simultaneous game you are playing against Czekanski Institute for Technology to set prices and assure the highest possible profit for Drew U. Why would you take these strategies?
Here are the strategies to succeed in the Duopoly market with simultaneous moves. First of all, I would try to go for a discrete strategy. In fact, whenever you are facing the Prisoner's dilemma, then you should always look for the mutual benefits. Prisoner's dilemma is the classic example of discrete strategy. Try and find the Nash Equilibrium for both participants would also be a strategy and take the first mover advantage. Moreover, before making any decision on the price, the Drew university should consider the current strategy of the Muller institute and anticipate the future reaction. Something to absolutely avoid is the get into a price war, as it is going to benefits the none. Finally, identifying the pay-offs and form the cartel with the competitor would be good strategies also, so that risk can be minimized. However, the best strategy to adopt would be to follow the maximin strategy. Maximin strategy is ideal for oligopoly markets where the organizations attempt to reduce risk of losing customers to the competitor. The strategy will maximize the minimum profit derived from the market. Since products in an oligopoly market can be below socially acceptable level, maximin strategy helps in swaying consumers to choose your product.
Based on all these informations respond to the following question
Based off your simultaneous game discussion in the above question, tree diagram to show how your pricing strategy would be presented to the consumers.
a. The tree diagram should begin with Drew U. and have four branches (one for each of the groups you can sell tickets to). Each branch should indicate a price point you would charge.
b. Why did you set the 4 price points you did?
c. What strategies can you use in this sequential game to assure you make the most money possible for Drew U.?