Set up the final store example as a five-by-five two-person game. Assume that both stores combined sell 100 items (per day), that the one with the lowest prices gets all the sales, and that they split the sales evenly when both have the same prices. Use the five possible prices ($2.00, $1.90, $1.80, $1.70, $1.60) as strategies and the total profits as outcome values. Show that repeated dominance reasoning leads them to split the lowest total profit.

Set up the final store example as a five-by-five two-person game. Assume that both stores combined sell 100 items (per day), that the one with the lowest prices gets all the sales, and that they split the sales evenly when both have the same prices. Use the five possible prices ($2.00, $1.90, $1.80, $1.70, $1.60) as strategies and the total profits as outcome values. Show that repeated dominance reasoning leads them to split the lowest total profit.

Essentials of Business Analytics (MindTap Course List)

2nd Edition

ISBN:9781305627734

Author:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Publisher:Jeffrey D. Camm, James J. Cochran, Michael J. Fry, Jeffrey W. Ohlmann, David R. Anderson

Chapter15: Decision Analysis

Section: Chapter Questions

Problem 23P: In Problem 22, if P(s1) = 0.25, P(s2) = 0.50, and P(s3) = 0.25, find a recommended decision for each...

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