2. There are two ice-cream stores, each of whom chooses a position from ten spots along the beach: spot 1, 2, 3, ...10. The ten spots are lined up and separated 100 meters from each other. 1 2 3 4 5 6 7 8 9 10 The consumers are equally distributed across these ten spots. Consumers buy from the store whose spot is closest to theirs. If the two stores are equidistant from a given spot, the consumers at that position split their consumption equally. The aim of the ice-cream stores is to maximize their share of the total ice-cream consumption. a. Is there any dominated strategy? If so, spell out explicitly how one strategy is dominated by another strategy. b. Is there any iterated dominance equilibrium?

2. There are two ice-cream stores, each of whom chooses a position from ten spots along the beach: spot 1, 2, 3, ...10. The ten spots are lined up and separated 100 meters from each other. 1 2 3 4 5 6 7 8 9 10 The consumers are equally distributed across these ten spots. Consumers buy from the store whose spot is closest to theirs. If the two stores are equidistant from a given spot, the consumers at that position split their consumption equally. The aim of the ice-cream stores is to maximize their share of the total ice-cream consumption. a. Is there any dominated strategy? If so, spell out explicitly how one strategy is dominated by another strategy. b. Is there any iterated dominance equilibrium?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

2. There are two ice-cream stores, each of whom chooses a position from ten spots along the
beach: spot 1, 2, 3, ...10. The ten spots are lined up and separated 100 meters from each
other.
1
2
3
4
5
6
7
8
9
10
The consumers are equally distributed across these ten spots. Consumers buy from the store
whose spot is closest to theirs. If the two stores are equidistant from a given spot, the
consumers at that position split their consumption equally. The aim of the ice-cream stores is
to maximize their share of the total ice-cream consumption.
a. Is there any dominated strategy? If so, spell out explicitly how one strategy is dominated
by another strategy. b. Is there any iterated dominance equilibrium?

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