AP 5 -

Two basketball players, Barbara and Juanita, are the best offensive players on the school's team. They know if they "cooperate" and work together offensively-feeding the ball to each other, providing screens for the other player, and the like-they can each score 12 points. If one player "monopolizes" the offensive game, while the other player "cooperates," however, the player who monopolizes the offensive game can score 18 points, while the other player can only score 2 points. If both players try to monopolize the offensive game, they each score 8 points. Construct a payoff matrix for the players that captures the essence of the decision of Barbara and Juanita to cooperate or monopolize the offensive game. If the players play only once, what strategy do you expect the players to adopt? If the players expect to play in many games together, what strategy do you expect the players to adopt? Explain.

2009 McGraw-Hill Irwin.  Used with permission from the publisher.  Brickley, J. A., Smith, C. W., & Zimmerman, J. L. (2009). Managerial economics and organizational architecture (RQ 9-6, p. 311). Boston: McGraw-Hill Irwin.

AP 9 in Text Ch 13, AP 11 pg 567 -

Recently one of the nation's largest consumer electronics retailers began a nationwide television advertising campaign kicking off it's take it home today program which is designed to encourage electronics consumers to buy today rather than continue postponing their purchase hoping for a lower price. For example, their  "take it home today" promotion guarantees buyers a new plasma TV Space that they are entitled to get any sale price the company might offer for the next 30 days.

a. Do you think such a policy with increased demand for electronic appliances explain?

b. What other reason could explain why this program is offered, would you expect the other large electronic store to match this program with one of their own why or why not?

AP 15 -

Formulate the following situation as an extensive form game (using a game tree) and solve it using backward induction. Bingo Corporation and Canal Corporation are the only competitors in the electronic organizer industry. Bingo Corporation is considering an R&D investment to improve its product. Bingo can choose from three levels of investment: High, Medium, and Low. Following Bingo's investment, Canal Corporation will have to choose between continuing to compete by selling its current product or undertaking an R&D project of its own. Canal can only choose one level of investment, so its choices are Invest or Not Invest. The net payoffs to Bingo if it invests High, Medium, or Low given that Canal chooses to Invest would be $50, $40, and $30, respectively, and the corresponding net payoffs to Canal would be $5, $10, and $15. On the other hand, the net payoffs to Bingo if it invests High, Medium, or Low given that Canal chooses to Not Invest would be $100, $80, and $60, respectively, and the corresponding net payoffs to Canal would be $0, $15, and $20. What will Bingo choose to do in equilibrium, and what will Canal's response be?

2009 McGraw-Hill Irwin.  Used with permission from the publisher.  Brickley, J. A., Smith, C. W., & Zimmerman, J. L. (2009). Managerial economics and organizational architecture (RQ 9-12, p. 312). Boston: McGraw-Hill Irwin.

With much regard, Lisa Proud Mommy of Katherine & Ella.