1. There are two airline carriers, Delta and American, that are deciding how many flights to run from New York (JFK) to Houston (IAH) per day. Delta can run a morning flight (M), an afternoon flight (A), both flights or nothing. American can run an Evening (E) flight or nothing. The two firm's profits corresponding to each possible scenario of available flights is given below: Product (Flight) Selection Delta profit American profit 13 M M,A M,A,E A,E 20 8 -4 4 1 E 12 M,E A 11 8 9 a. Set up the payoff matrix for when the two firms simultaneously choose which flights to run. What is the Nash Equilibrium (or equilibria) of this game?

1. There are two airline carriers, Delta and American, that are deciding how many flights to run from New York (JFK) to Houston (IAH) per day. Delta can run a morning flight (M), an afternoon flight (A), both flights or nothing. American can run an Evening (E) flight or nothing. The two firm's profits corresponding to each possible scenario of available flights is given below: Product (Flight) Selection Delta profit American profit 13 M M,A M,A,E A,E 20 8 -4 4 1 E 12 M,E A 11 8 9 a. Set up the payoff matrix for when the two firms simultaneously choose which flights to run. What is the Nash Equilibrium (or equilibria) of this game?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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