Suppose Jim and Celia,a Married Couple,are Trying to Decide What

question 1

Multiple Choice

Suppose Jim and Celia,a married couple,are trying to decide what to do on a Friday.Jim would prefer to see Rambo X while Celia would prefer to see Das Auto,an arty foreign film.Both films are showing at the local Megaplex.The joy they receive from the films and seeing them together,or separately,is shown in the payoff matrix.Both Jim and Celia know the information contained in the payoff matrix.They purchase their tickets simultaneously,ignorant of the other's choice.
-Refer to the payoff matrix above.Suppose a timing element is added to the game: assume Celia buys her ticket first.While Jim did not see which ticket Celia bought,he still knows the values in the payoff matrix.Acting on the basis of self interest,Celia will

• A) buy a ticket to both movies.
• B) buy a ticket to Das Auto.
• C) flip a coin to determine which ticket to buy.
• D) buy a ticket to Rambo X.
• E) go home.

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Definitions:

Market Price

The market price is the current price at which an asset or service can be bought or sold in a marketplace.

Corporate Dividends

Funds disbursed by a corporation to its shareholders, typically as a distribution from profits.

Information Content Effect

The phenomenon where stock prices adjust in response to new information being released, reflecting its value or implications.

Dividend Policy

A company's strategy or guidelines dictated to decide how much it will pay out to shareholders in dividends.