Set up the payoff matrix.Your fast-food outlet, Burger Queen, has obtained a license to open branches in three closely situated South African cities: Brakpan (B), Nigel (N), and Springs (S). Your market surveys show that Brakpan and Nigel each provide a potential market of 2,100 burgers a day, while Springs provides a potential market of 850 burgers per day. Your company can finance an outlet in only one of those cities. Your main competitor, Burger Princess, has also obtained licenses for these cities, and is similarly planning to open only one outlet. If you both happen to locate at the same city, you will share the total business from all three cities equally, but if you locate in different cities, you will each get all the business in the cities in which you have located, plus half the business in the third city. The payoff is the number of burgers you will sell per day minus the number of burgers your competitor will sell per day.
Set up the payoff matrix.
Your fast-food outlet, Burger Queen, has obtained a license to open branches in three closely situated South African cities: Brakpan (B), Nigel (N), and Springs (S). Your market surveys show that Brakpan and Nigel each provide a potential market of 2,100 burgers a day, while Springs provides a potential market of 850 burgers per day. Your company can finance an outlet in only one of those cities. Your main competitor, Burger Princess, has also obtained licenses for these cities, and is similarly planning to open only one outlet. If you both happen to locate at the same city, you will share the total business from all three cities equally, but if you locate in different cities, you will each get all the business in the cities in which you have located, plus half the business in the third city. The payoff is the number of burgers you will sell per day minus the number of burgers your competitor will sell per day.
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