26 Jan A night club owner
This competency will allow you to demonstrate your ability and skill in analyzing zero-sum games and synthesizing optimal strategies within them.
Instructions
A night club owner has just changed ownership and the new owner has contracted G&B consulting to help decide the direction the club will take. Based on the local music scene, it would make the most sense to book either rock bands or country bands. The new owner is aware that a competing night club is hoping to attract new customers while the new club is getting itself established. Since these are the only two night clubs in town competing to book the same bands, whatever market share is gained by one is lost by the other making this a zero-sum game. The new club owner has hired you to find the optimum strategy for this situation.
What to Submit
Deliverable 04 – Worksheet
1. Market research has determined the following changes in market shares based on the different combinations of music choices for the two clubs: if both clubs play country, the new club (Club 1) does very well with a 24% increase in market share. If Club 1 plays country and the competing club (Club 2) plays rock, Club 2 gets a 12% increase in market share. If these choices are reversed, Club 2 does even better and gets an 18% increase in the market share. Lastly, if both clubs play rock, Club 1 does better and gets a 6% increase in market share. This results in the following payoff matrix:
Club 2
Club 1
Country
Rock
Country
(24, -24)
(-12, 12)
Rock
(-18, 18)
(6, -6)
Use this payoff matrix to determine if there are dominant strategies for either player. Find any Nash equilibrium points. Show all of your work.
Text Box: Enter your step-by-step answer and explanations here.
2. Use the payoff matrix from number 1 to determine the optimum strategy for Club 1. Show all of your work.
Text Box: Enter your step-by-step answer and explanations here.
3. Use the payoff matrix from number 1 to determine the optimum strategy for Club 2. Show all of your work.
Text Box: Enter your step-by-step answer and explanations here.
4.
5. Find and interpret the value of the game.
Text Box: Enter your step-by-step answer and explanations here.
6. Working in parallel your co-worker wants to make the recommendation that the new club owner should always follow the schedule shown below. Do you agree or disagree with this strategy? Explain your reasoning.
Wednesday
Thursday
Friday
Saturday
Sunday
Country
Rock
Country
Rock
Country
Text Box: Enter your step-by-step answer and explanations here.
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