Apple and Google are interested in hiring a new CEO. Both firms have the same set of final candidates for the CEO position: Indra, Cao, and Virginia. Both firms need to decide who to make a job offer to, and the hiring process is such that they each only make one job offer. If, say, Apple makes a job offer to Indra and Google makes a job offer to one of the other candidates, then Apple’s probability of success in hiring Indra is pIndra. The same is true for Google. If they both make a job offer to Indra, each has probability pIndra/2 of success. It has been estimated that pIndra = 20%, and pCao = pVirginia = 30% (Note that these probabilities need not add up to 100%). Suppose that both Apple and Google attach a valuation of 10 to successfully hiring Indra, and a valuation of 7 to successfully hiring each of the other candidates. A hiring attempt, if unsuccessful, has a valuation of zero. (a) Convert this story into a game by completing the following game table; Google Indra Cao Virginia Apple Indra (1, 1) Cao
Apple and Google are interested in hiring a new CEO. Both firms have the same set of final
candidates for the CEO position: Indra, Cao, and Virginia. Both firms need to decide who to
make a job offer to, and the hiring process is such that they each only make one job offer.
If, say, Apple makes a job offer to Indra and Google makes a job offer to one of the other
candidates, then Apple’s probability of success in hiring Indra is pIndra. The same is true for
Google. If they both make a job offer to Indra, each has probability pIndra/2 of success. It has
been estimated that pIndra = 20%, and pCao = pVirginia = 30% (Note that these probabilities need
not add up to 100%).
Suppose that both Apple and Google attach a valuation of 10 to successfully hiring Indra, and a
valuation of 7 to successfully hiring each of the other candidates. A hiring attempt, if
unsuccessful, has a valuation of zero.
(a) Convert this story into a game by completing the following game table;
Google
Indra Cao Virginia
Apple Indra (1, 1)
Cao
Virginia (1.05, 1.05)
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