Two mining companies, Red and Blue, bid for the right to drill a field. The possible bids are $ 15 Million, $ 25 Million, $ 35 Million, $ 45 Million and $ 50 Million. The winner is the company with the higher bid. The two companies decide that in the case of a tie (equal bids), Red is the winner and will get the field. Company Red has ordered a geological survey and, based on the report from the survey, concludes that getting the field for more than $ 45 Million is as bad as not getting it (assume loss), except in case of a tie (assume win). 1)Considering all possible combinations of bids, formulate the payoff matrix for the game. 2) Verify: does the game have a saddle point? 3)
Two mining companies, Red and Blue, bid for the right to drill a field. The possible bids are $ 15 Million, $ 25 Million, $ 35 Million, $ 45 Million and $ 50 Million. The winner is the company with the higher bid. The two companies decide that in the case of a tie (equal bids), Red is the winner and will get the field. Company Red has ordered a geological survey and, based on the report from the survey, concludes that getting the field for more than $ 45 Million is as bad as not getting it (assume loss), except in case of a tie (assume win). 1)Considering all possible combinations of bids, formulate the payoff matrix for the game. 2) Verify: does the game have a saddle point? 3)
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Two mining companies, Red and Blue, bid for the right to drill a field. The possible bids are $ 15 Million, $ 25 Million, $ 35 Million, $ 45 Million and $ 50 Million. The winner is the company with the higher bid.
The two companies decide that in the case of a tie (equal bids), Red is the winner and will get the field.
Company Red has ordered a geological survey and, based on the report from the survey, concludes that getting the field for more than $ 45 Million is as bad as not getting it (assume loss), except in case of a tie (assume win). 1)Considering all possible combinations of bids, formulate the payoff matrix for the game. 2) Verify: does the game have a saddle point? 3)
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