3.On the way to my mother's house for Thanksgiving dinner, my wife was on her phone and noted that Old Navy was going to be open for Black Friday sales starting on Thursday at 3pm. Many people lament the fact that stores are open very early the day after Thanksgiving or, as it seems, even open on Thanksgiving Day itself. The owners, managers, and employees of retail stores presumably would enjoy spending Thanksgiving with their families instead of preparing for Black Friday sales, yet almost every store announces that it will open very early on Friday morning for shoppers. How might game theory offer an explanation for this unexpected behavior?

4.The following is a payoff matrix showing profit in millions of dollars when two companies simultaneously decide on various advertising budgets ($1 million, $2 million, or $3 million):

Pizza Hut

$1 mill

$2 mill

$3 mill

$1 mill

$70 / $125

65 / 130

55 / 120

Papa Johns

$2 mill

85 / 120

70 / 110

65 / 105

$3 mill

80 / 100

75 / 95

60 / 90

a.In the first round of strategy elimination (when all three possible budgets are under consideration), which ad budget would the companies exclude?

b.After the first round of elimination (previous question), would either company make a second-round elimination?

c.What would be the likely outcome of this simultaneous advertising decision (i.e. what ad budget would each company end up choosing)?