game where two food carts locâtéd néxt tô eäch öt are competing many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first and sets its price, the second cart, called Tridip's opens second and sets its price after observing the price set by Ashok's. To keep it simple let's suppose there are three prices possible for both carts: high, medium, low. Using the game tree below, answer the following: a. How many subgames are there in the game tree? b. What is the strategy profile for the players?

ENGR.ECONOMIC ANALYSIS
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Chapter1: Making Economics Decisions
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Consider a game where two Indian food carts located next to each other are competing for
many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first
and sets its price, the second cart, called Tridip's opens second and sets its price after
observing the price set by Ashok's. To keep it simple let's suppose there are three prices
possible for both carts: high, medium, low. Using the game tree below, answer the
following:
a. How many subgames are there in the game tree?
b. What is the strategy profile for the players?
c. What is the Nash equilibrium?
High
400, 380
Tridip's
Medium
340, 410
Low
230, 330
High
400, 340
High
Tridip's
Medium
Ashok's
Medium
360, 350
Low
210, 360
Low
High
370, 300
39
Tridip's
Medium
350, 260
Transcribed Image Text:Consider a game where two Indian food carts located next to each other are competing for many of the same customers for its Tikka Masala. The first cart, called Ashok's, opens first and sets its price, the second cart, called Tridip's opens second and sets its price after observing the price set by Ashok's. To keep it simple let's suppose there are three prices possible for both carts: high, medium, low. Using the game tree below, answer the following: a. How many subgames are there in the game tree? b. What is the strategy profile for the players? c. What is the Nash equilibrium? High 400, 380 Tridip's Medium 340, 410 Low 230, 330 High 400, 340 High Tridip's Medium Ashok's Medium 360, 350 Low 210, 360 Low High 370, 300 39 Tridip's Medium 350, 260
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