Consider the following simple model of a cocktail party. Alice and Bob are carrying on separate conversations at the party. Alice speaks at volume a and Bob speaks at volume b. The communicatio al(a + b) and the benefit to Bob is b/(a + b). The vocal-strain cost to Alice is ca and the cost to Bob is cb, where c is a parameter. Suppose that the players have two choices: speaking softly at volume 1, or speaking loudly at volume 4. This leads to the following game in s Alice choosing the row and Bob choosing the column.

Consider the following simple model of a cocktail party. Alice and Bob are carrying on separate conversations at the party. Alice speaks at volume a and Bob speaks at volume b. The communicatio al(a + b) and the benefit to Bob is b/(a + b). The vocal-strain cost to Alice is ca and the cost to Bob is cb, where c is a parameter. Suppose that the players have two choices: speaking softly at volume 1, or speaking loudly at volume 4. This leads to the following game in s Alice choosing the row and Bob choosing the column.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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