Wednesday
April 16, 2014

Homework Help: game theory economics

Posted by aaniya gill on Sunday, October 2, 2011 at 3:37am.

Mitchell Electronics produces a home video game that has become very popular with children. Mitchell’s managers have reason to believe that Wright Televideo Company is considering entering the market with a competing product. Mitchell must decide whether to set a high price to accommodate entry or a low, entry deterring price. The payoff matrix below shows the profit outcome for each company under the alternative price and entry strategies. Mitchell’s profit is entered before the comma, and Wright’s is after the comma.
Wright Televideo

Mitchell Electronics
Enter Do not Enter
60, 25 85, 0
30, -20 60, 0
High Price
Low Price


a. Does Mitchell have a dominant strategy? Explain (5 points)
b. Does Wright have a dominant strategy? Explain (5 points)
c. Mitchell’s managers have suggested a willingness to lower price in order to deter entry. Is this threat credible in light of the payoff matrix above? Explain. (7 points)
d. If the threat is not credible, what changes in the game would be necessary to make the threat credible? What business strategies could Mitchell use so that the threat is credible?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

maths, economics, game theory - 1. What is a degenerate game? 2. Is the ...
math - haris has 20.92 to spend on videos-games rentals at a local video store. ...
music - hey does anyone know which band plays the runaway song in the video game...
english - i have to write an essay of my choice so i chose game designer can ...
economics (game theory) - Consider the normal tick tack toe game, but this time ...
computer - Your purchase the lastes'must have' computer video game from the ...
Pre-Algebra - Montel spends $0.75 every time he plays his favorite video game. ...
economics (game theory) - For anyone with experience working with game theories...
To: Reiny- Math - Thank you so much for helping me but for #2 c.) is it yes or a...
Math - 2.Which of the following is equal to )? A.6x2x(0x4) B.0/9+(6-0) C.20/20-...

Search
Members