You, a real-estate developer, own a piece of land in Nassau, Bahamas, next to an equal size piece of land owned by a competitor. Both of you have the choice of building a casino or a hotel. Your payoffs are as follows: Your competitor Casino Hotel You Casino Hotel 3 , 3 20 , 5 5 , 20 2 , 2

You, a real-estate developer, own a piece of land in Nassau, Bahamas, next to an equal size piece of land owned by a competitor. Both of you have the choice of building a casino or a hotel. Your payoffs are as follows: Your competitor Casino Hotel You Casino Hotel 3 , 3 20 , 5 5 , 20 2 , 2

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter16: Bargaining

Section: Chapter Questions

Problem 3MC

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Question

Your competitor	Casino Hotel	You
Casino	Hotel
3 , 3	20 , 5
5 , 20	2 , 2

If this is played as a sequential game, how much is it worth to you to get your casino building permit first?

Group of answer choices

$2 million.

$3 million.

$15 million.

$20 million.

none of the above.

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