(3) On-campus corporate presentations: Sympathy for the Devil

Many students complain about the high number of corporate presentations taking place bothon and off-campus. In this question, we seek to explore this phenomenon.

Suppose that Stern is playing a game with other business schools (to be specific, think ofColumbia). Both schools are concerned with ensuring that their students find gainfulemployment at the end of their courses of study. Specifically, suppose that they assign a value of100 from doing so. Suppose that if neither or both schools allow corporate presentations, thenrecruiters are equally likely to hire from either school; however, if only one school allowspresentations then its students are likely to be hired with 75% probability, whereas the otherschool's students' chances of getting hired fall to 25%. Allowing corporate presentations takestime, which could be used for additional classes or recreational activities to which the schoolassigns a value 10.

(a) Describe the game in a normal form. What would you expect to be the outcome?(b) A limitation of the analysis in (a) is that Stern and Columbia play this game every year. Suppose that each has an annual interest rate of 5%. It is possible to achieve a better outcome than in (a). Explain how and illustrate your argument formally (e.g., specify what strategy the schools should use in order to achieve the better outcome).

(c) Can you think of any factors that might make it difficult to achieve this better outcome?