This game has two players: the employee (Homer) and the employer (Mr. Burns). Homer has to decide whether or not to pursue a training opportunity that will cost him $1,000. Undergoing the training will give Homer the opportunity to potentially generate additional revenue through a new business venture. Mr. Burns has to decide whether or not to pay a fixed wage to Homer of $10,000 for the new venture or to share the revenue from the new enterprise with Homer on a 50/50 split. Demand for the new venture is somewhat unpredictable. Cash flows are positively affected by both training and revenue sharing. With no training and a fixed wage, cash flow is projected to be $20,000. If either training or revenue sharing is implemented, cash flows rise to $22,000. If both training and revenue sharing are implemented, the cash flow position is even better at $25,000. Construct a pay-off matrix for this scenario. Is there a dominant strategy for both parties that results in equilibrium? Explain your thinking
This game has two players: the employee (Homer) and the employer (Mr. Burns). Homer has to decide whether or not to pursue a training opportunity that will cost him $1,000. Undergoing the training will give Homer the opportunity to potentially generate additional revenue through a new business venture. Mr. Burns has to decide whether or not to pay a fixed wage to Homer of $10,000 for the new venture or to share the revenue from the new enterprise with Homer on a 50/50 split. Demand for the new venture is somewhat unpredictable. Cash flows are positively affected by both training and revenue sharing. With no training and a fixed wage, cash flow is projected to be $20,000. If either training or revenue sharing is implemented, cash flows rise to $22,000. If both training and revenue sharing are implemented, the cash flow position is even better at $25,000.
- Construct a pay-off matrix for this scenario.
Is there a dominant strategy for both parties that results in equilibrium? Explain your thinking
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