With the opening of the new student union on the campus, three firms are contemplating opening retail food operations in the new union. The three firms considering opening up shops include Starbucks, Tully’s Coffee, and Joe’s Java and Sandwich Shop. Given their national reputation, Starbucks has been given the first choice of whether to open up a shop in the new Union or not. After Starbucks makes their decision, Tully’s will decide to open or not, followed by Joe’s. State law prohibits the firms from signing any binding agreements concerning the division of profits. The possible outcomes and associated total payoffs from this game are shown in the table below. Joe’s: Open Tully’s Open Tully’s: Not Open Starbuck: Open 13, 5, 8 15, 6, 5 Starbuck: Not Open 4, 12, 10 5, 3, 22 Joe’s: Not Open Tully’s Open Tully’s: Not Open Starbuck: Open 15, 10, 3 25, 2, 3 Starbuck: Not Open 3, 12, 3 5, 5, 5 The first payoff in each cell is for Starbucks, second is Tully’s, third is Joe’s. Draw the complete game tree for this situation. Be sure to accurately label the tree and include the payoffs. Assuming that all players will use backward induction (look forward and reason back), please clearly specify what each firm will do in this game and the ultimate outcome to the game.

MATLAB: An Introduction with Applications

6th Edition

ISBN:9781119256830

Author:Amos Gilat

Publisher:Amos Gilat

Chapter1: Starting With Matlab

Section: Chapter Questions

Problem 1P

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With the opening of the new student union on the campus, three firms are contemplating opening retail food operations in the new union. The three firms considering opening up shops include Starbucks, Tully’s Coffee, and Joe’s Java and Sandwich Shop. Given their national reputation, Starbucks has been given the first choice of whether to open up a shop in the new Union or not. After Starbucks makes their decision, Tully’s will decide to open or not, followed by Joe’s. State law prohibits the firms from signing any binding agreements concerning the division of profits. The possible outcomes and associated total payoffs from this game are shown in the table below.

Joe’s: Open

	Tully’s Open	Tully’s: Not Open
Starbuck: Open	13, 5, 8	15, 6, 5
Starbuck: Not Open	4, 12, 10	5, 3, 22

Joe’s: Not Open

	Tully’s Open	Tully’s: Not Open
Starbuck: Open	15, 10, 3	25, 2, 3
Starbuck: Not Open	3, 12, 3	5, 5, 5

The first payoff in each cell is for Starbucks, second is Tully’s, third is Joe’s.

Draw the complete game tree for this situation. Be sure to accurately label the tree and include the payoffs.
Assuming that all players will use backward induction (look forward and reason back), please clearly specify what each firm will do in this game and the ultimate outcome to the game.

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