Peter and Ngomongo are second hand dealers of electronic equipment and shoes along Baricho road. Due to hard economic times and restriction by City Council, sales...

      

Peter and Ngomongo are second hand dealers of electronic equipment and shoes along Baricho road. Due to hard economic times and restriction by City Council, sales have been decreasing. Each of them came up with strategies to expand into the other business (they have monopoly now). Each of them knows what the other is considering thus influences each others decision. Peter had the following matrix of profit per day.

pete12022019116.png

Required:
i) Interpret the matrix.
ii) Solve the game to determine the average winning (loss) each cousin would have

  

Answers


Wilfred
i) If Peter expands and Ngomongo expands too, Peter will have additional profit per day of Sh1000, otherwise if Ngomongo does not expand then there will be no additional profit to Peter. In case Peter does not expand and Ngomongo does, then he will loose Sh500 per day, otherwise if Ngomongo does not expand too then he will be getting Sh500 profit

ii) The payoff table is as follows:
pete22022019118.png
pete32022019118.png
Wilfykil answered the question on February 20, 2019 at 09:19


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