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Table 11-9 Alpha and Beta Are the Only Firms Selling

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Table 11-9
Table 11-9    Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 11-9 shows the payoff matrix for this game. -Refer to Table 11-9.Does Alpha have a dominant strategy and if so,what is it? A)  Yes, Alpha should offer a student discount. B)  Yes, Alpha should not offer a student discount. C)  There are two dominant strategies: if Beta offers a student discount then Alpha's best bet is to not offer a student discount, but if Beta does not offer a student discount then Alpha should offer a student discount. D)  No, there is no dominant strategy. Alpha and Beta are the only firms selling gyros in the upscale town of Delphi. Each firm must decide on whether to offer a discount to students to compete for customers. If one firm offers a discount but the other does not, then the firm that offers the discount will increase its profit. Table 11-9 shows the payoff matrix for this game.
-Refer to Table 11-9.Does Alpha have a dominant strategy and if so,what is it?


Definitions:

Sentiment Indicator

A measure or index that shows the overall attitude of investors towards a particular security or the financial market as a whole.

Confidence Index

A measure often used to gauge the sentiment or optimism among investors about the future economic outlook.

Short Interest

The aggregate amount of a specific stock's shares that investors have short sold and are yet to close or cover.

Diminishing Marginal Utility

A principle stating that as a person increases consumption of a product, there is a decline in the additional satisfaction a person gains from consuming one more unit.

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