Dale and Terry Are Racing Automobiles Around a Track

question 77

Essay

Dale and Terry are racing automobiles around a track. Currently, Terry is in the lead. However, Dale has a faster car and is just behind Terry. The racers' strategies and payoffs are presented in the table below. The goal of the drivers is to do as well as possible in the race. There are a total of 43 cars on the track. Does either player have a dominant strategy? Does the game have a Nash equilibrium? What is the maximin strategy of each player in the game?

---

Definitions:

Leverage

Utilizing borrowed funds to amplify the possible returns on an investment.

Portfolio's Beta

A measure of the overall volatility or risk of an investment portfolio in comparison to the market as a whole.

S&P500 Value

A measurement of the stock performance of 500 large companies listed on stock exchanges in the United States.

Portfolio Value

The total market value of all the investments held by an individual or institution, including stocks, bonds, and other securities.