Marta and Sara are two students that devote part of their free time to doing surveys for a market research company. The income obtained from this activity depends on the number of surveys they do, bearing in mind that the girls may freely choose the interviewees. As they both live in the same neighborhood in case, they just interview their neighbors (N), they compete for the same people and their monthly income is about 250 Euros. If they both choose to go to other neighborhoods of the city and interview strangers (S), they can carry out more surveys and both their incomes would be 400. If one of them decides to go and interview people in another neighborhood but the other one does not, the former will obtain income for 500, and the latter for 300, and vice versa. After receiving the order from the company, Marta is always the one who starts to work first. Sara has information about the places where Marta has done the surveys. Please: Represent this game extensively.Represent this game normally and look for Nash equilibrium.Calculate the perfect equilibrium in subgames.Now imagine that none of the girls can know where the other one is carrying out the surveys (there is not sequentially). Represent the new game normally and calculate Nash equilibrium(s) of the game.

In the above game there are two players - Marta & Sara Strategy Set of Marta = Strategy Set of…

Answered: Marta and Sara are two students that…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Marta and Sara are two students that devote part of their free time to doing surveys for a market research company. The income obtained from this activity depends on the number of surveys they do, bearing in mind that the girls may freely choose the interviewees. As they both live in the same neighborhood in case, they just interview their neighbors (N), they compete for the same people and their monthly income is about 250 Euros. If they both choose to go to other neighborhoods of the city and interview strangers (S), they can carry out more surveys and both their incomes would be 400. If one of them decides to go and interview people in another neighborhood but the other one does not, the former will obtain income for 500, and the latter for 300, and vice versa. After receiving the order from the company, Marta is always the one who starts to work first. Sara has information about the places where Marta has done the surveys. Please:

Represent this game extensively.
Represent this game normally and look for Nash equilibrium.
Calculate the perfect equilibrium in subgames.
Now imagine that none of the girls can know where the other one is carrying out the surveys (there is not sequentially). Represent the new game normally and calculate Nash equilibrium(s) of the game.

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