3 Theater 1 and Theater 2 are the only movie theaters in town. They each choose one ofthree prices for movie tickets: Low, Medium, or High. If they select the same price, theywill split the market. If one of the movie theaters chooses a lower price, it will get moreclients. Their interaction is described as a game.Theater 2High($6,000, $0)|($2,000, $5,000) | ($4,000, $4,000) | ($7,000, $2,000)($2,000, $7,000) ($5,000, $5,000)Medium($3,000, $3,000) ($5,000, $2,000)LowLowMediumHigh($0, $6,000)a) Do these players have a maxi-min or dominant strategies? If so, what are they?b) What are the Nash equilibrium or equilibria for this game? Explainc) What kind of games is this? What is the profit-maximizing (the highest total profit)outcome and how can the theaters reach it?Theater 1

Game Theory is a part of economics that studies the different ways the various choices of economic…

Theater 1 and Theater 2 are the only movie theaters in town. They each choose one of three prices for movie tickets: Low, Medium, or High. If they select the same price, they will split the market. If one of the movie theaters chooses a lower price, it will get more clients. Their interaction is described as a game. Theater 2 High ($6,000, $0) |($2,000, $5,000) ($4,000, $4,000)| ($7,000, $2,000) ($5,000, $5,000) Low Medium Low |($3,000, $3,000) ($5,000, $2,000) Medium High ($0, $6,000) ($2,000, $7,000) a) Do these players have a maxi-min or dominant strategies? If so, what are they? b) What are the Nash equilibrium or equilibria for this game? Explain c) What kind of games is this? What is the profit-maximizing (the highest total profit) outcome and how can the theaters reach it? Theater 1

Theater 1 and Theater 2 are the only movie theaters in town. They each choose one of three prices for movie tickets: Low, Medium, or High. If they select the same price, they will split the market. If one of the movie theaters chooses a lower price, it will get more clients. Their interaction is described as a game. Theater 2 High ($6,000, $0) |($2,000, $5,000) ($4,000, $4,000)| ($7,000, $2,000) ($5,000, $5,000) Low Medium Low |($3,000, $3,000) ($5,000, $2,000) Medium High ($0, $6,000) ($2,000, $7,000) a) Do these players have a maxi-min or dominant strategies? If so, what are they? b) What are the Nash equilibrium or equilibria for this game? Explain c) What kind of games is this? What is the profit-maximizing (the highest total profit) outcome and how can the theaters reach it? Theater 1

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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