Question: suppose 2 companies are competing for a percentage of the...
Suppose 2 companies are competing for a percentage of the market share, and the table below represents the market share change for company B as well as three strategies that companies A and B might employ.
A. If Company A offers a discount price and Company B offers a free gift with purchase, what will be the change in market share for company B?
B. Company A will want to maximize the minimum payoff, thereby employing the Maximin approach to the game. Which strategy will Company A select based on the Maximin approach?
C. Company B will select the strategy that minimizes the maximum payoff, thereby employing the Minimax approach to the game. Which strategy will Company B select based on this approach?
D. If a game is a mixed strategy solution, the players select their strategy based on a probability distribution. Let P(AB) = the probability that company A boosts advertising = 1/4 Let P(AF) = the probability that company A offers a free gift with purchase = 1/4 Let P(AD) = the probability that company A offers discounted price = 1/2 Calculate the Expected Gain in market share for company A across all 3 company B strategies. E(BB) = E(BF) = E(BD) =