Spreadsheet Modeling & Decision Analysis: A Practical Introduction To Business Analytics, Loose-leaf Version
8th Edition
ISBN: 9781337274852
Author: Ragsdale, Cliff
Publisher: South-Western College Pub
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Consider the following Bargaining game, where each player tries to maximize his own number of coins.
Player A starts the game with 3 coins and Player B starts with 1 coin. Player A needs to decide how many coins to give to Player B. Player A moves first, and makes an offer to Player B. Player B observes the offer, and then chooses to accept or reject the offer.
If player B rejects the offer, the game is over: Player A loses all his 3 coins and player B losses his 1 coin (both players end up with zero coins).
If Player B accepts the offer, the game is over: Player B keeps his original 1 coin plus the coin(s) offered by Player A, while Player A keeps the coin(s) he did not offer to player B.
In the subgame perfect equilibrium of this game: Select the right option from below
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Which of the following gambles has the largest objective risk?
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A NY Times best-selling author wants to write a new book as either volume II of her earlier successful book or an autobiography. She believes that by writing the volume II, given her previous success, she will have a 50% chance of placing it with a major publisher where it should ultimately sell about 40,000 copies. However, the worst-case scenario, if she can’t get a major publisher to take it, then she thinks there is 80% chance of placing it with a smaller publisher, with sales of 30,000 copies. On the other hand, if she writes an autobiography, considering the potential interest in her journey as successful writer, she thinks there will be 40% chance of placing it with a major publisher, and it should result in ultimate sales of about 50,000 copies. If she can’t get a major publisher to take it, the worst-case scenario, she thinks there is a 50% chance of placing it with a smaller publisher, with ultimate sales of 35,000 copies.
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