There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys from the vendor closest to their location and when equidistant from both vendors they choose by coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of location by the two vendors is a Nash equilibrium if no vendor can do better by deviating unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys from the vendor closest to their location and when equidistant from both vendors they choose by coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of location by the two vendors is a Nash equilibrium if no vendor can do better by deviating unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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There is a city, which looks like chopped isosceles triangle, as shown below. Citizens live
uniformly distributed all over the city. Two ice-cream vendors, A and B, must independently set up stores in the city. Each citizen buys
from the vendor closest to their location and when equidistant from both vendors they choose by
coin toss. Each vendor’s aim is to maximize the expected number of customers. A choice of
location by the two vendors is a Nash equilibrium if no vendor can do better by deviating
unilaterally. Does this game have a Nash equilibrium? If so, describe it. If not, explain why not
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