The decision tree below describes the game faced by firm H and firm T. The payoffs are profits in million of US$.The complete plan of action for this game is: H={BL}, T={BL if BL, NB if BS, BL if NB} H={BS}, T={BS if BL, BS if BS, BL if NB} H={BS}, T={BS and NB} H={BL}, T={BS if BL, BS if BS, BL if NB} H={BS}, T={BL if BL, NB if BS, BL if NB} BuildLarge(10 , 10)TBuildSmall(14 , 18)BuildNo Build(22 , 2)LargeBuildBuild(12 , 8)LargeSmall TBuildSmall(18 , 14)No Build(22 , 6)No BuildBuild(9 , 18)(4 , 16)LargeTBuildSmallNo Build(10 , 10)

please find the answer below.We can see from the table above that when player H picks between BL and BS, the optimum option for T is to choose BS because it provides him the highest payoff. When player H selects NB, the optimum approach for T is to select BL. Finally, the optimum approach for H is to BS since it provides the highest payoff; hence, the entire plan of action is T=BS if BL, BS if BS, BL if NB, and H=BS.

Answered: The decision tree below describes the…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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The decision tree below describes the game faced by firm H and firm T. The payoffs are profits in million of US$.

The complete plan of action for this game is:

		H={BL}, T={BL if BL, NB if BS, BL if NB}
		H={BS}, T={BS if BL, BS if BS, BL if NB}
		H={BS}, T={BS and NB}
		H={BL}, T={BS if BL, BS if BS, BL if NB}
		H={BS}, T={BL if BL, NB if BS, BL if NB}

Build
Large
(10 , 10)
T
Build
Small
(14 , 18)
Build
No Build
(22 , 2)
Large
Build
Build
(12 , 8)
Large
Small T
Build
Small
(18 , 14)
No Build
(22 , 6)
No Build
Build
(9 , 18)
(4 , 16)
Large
T
Build
Small
No Build
(10 , 10)

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