Answered step by step
Verified Expert Solution
Question
1 Approved Answer
5. Assume that you are at the Christchurch airport waiting to board a ight to visit your family for Christmas. Let us say 190 passengers
5. Assume that you are at the Christchurch airport waiting to board a ight to visit your family for Christmas. Let us say 190 passengers (including you) want to board the ight. Assume that ight attendants are absent to guide you properly. So, everyone is rushing for no reason. There are two doors to enter the ight (front and back), and each passenger decides which one to take. The satisfaction! utility of entering the front door is 10 units (the way to the front door has a footpath bridge that protects you from the rain). In contrast, the back door is the least preferred and has 0 satisfaction! utility (because it takes more time to reach the seat, you must go out of the terminal, and it is raining heavily). In deciding which door to take, each passenger cares only about net satisfaction! utility. Passengers' payoff is assumed to be their net utility. Net Utility ofa Passenger = Satisfaction of Taking a Door Time Cost to Reach the Seat Ifm passengers are taking the front door, the time cost for a passenger to reach the seat is assumed to be m units. In contrast, if m passengers take the back door, the time cost is 2m units to reach the seat. Passengers make simultaneous decisions as to whether to take the front or back door. a. Derive each passenger's payoff function (3 marks). b. Find a Nash Equilibrium (2 marks)
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started