Abel, Brenda, and Carlos are members of the Human Resources Management club at their university. The club plans to bring a motivational speaker to campus with money earned selling doughnuts at the local farmers' market. If the club sells doughnuts on three weekends, it will be able to afford a terrific speaker and Abel, Brenda, and Carlos will each get 100 units of happiness. If the club sells doughnuts on two weekends, it will be able to afford an above average speaker that brings each member 70 units of happiness. If the club sells doughnuts on just one weekend, it will be able to bring in their college's personnel director to speak and each member will receive 25 units of happiness. If the club doesn't sell doughnuts at all, nobody will receive anything.

Abel is scheduled to sell doughnuts the first weekend, Brenda the second, and Carlos the third, after which the farmers' market closes down for the winter. Working at the farmers' market costs the worker 40 units of happiness.

On the scheduled day, each worker must choose between staffing the doughnut stand or sleeping in.

a. Draw the extensive form of this game, with Abel moving first, Brenda second, and Carlos third.

b. Solve for the equilibrium outcome of this game. What does each player do? What kind of speaker does the club bring in?

c. Is there an advantage to being the first mover in this game? Explain why or why not.

b. The equilibrium outcome is that Abel will sleep in; Brenda and Carlos will sell doughnuts. The club will bring in an above-average speaker.
c. Yes, there is an advantage to being the first mover. Abel is the only one who sleeps in. As long as one of the two players prior to Carlos chooses to sell doughnuts, then Carlos will choose to sell doughnuts. If Abel takes the opportunity to sleep in, he can create an outcome in which the other two will sell doughnuts.

Transcribed Image Text:

Doughnuts (60, 60, 60) Sleep Doughnuts Carlos Brenda (30,30, 70) Doughnuts(30, 70,30) Sleep Doughnuts Carlos Sleep Alloa (-15, 25, 25) Doughnuts (70,30, 30) Sleep Doughnuts Sleep Brenda Carlos (25,-15,25) leepDoughnuts (25,25,-15) Carlos Sleep (0, 0, 0)