Afghan Saffron Exporters Vs Iranian Saffron Market: Economists use Game Theory as a tool to analyze economic competition, economic phenomena such as bargaining, mechanism design, auctions, voting theory; experimental economics, political economy, behavioral economics etc. Refer to below short case study and respond to listed questions using the core concept of Game theory to determine and analyses the expected outcome. A company, say Afghan Saffron, is considering entering the Iranians market which is dominated by its principal rival, say Iranian Saffron. Clearly, Afghan Exporters decision to enter or not will be judged on the potential profitability of such a move. This, in turn, depends upon the way Iranian will react to such a business move by Afghan Exporters. If Iranian reacts aggressively by launching a big commercial campaign, then an entry by Afghan n Saffron Exporters will result to a loss of $2.8 million for Afghan Saffron Exporters and a loss of $2.2 million for Iranian Manufacturers. If, on the other hand, Iranian accommodates Afghan Saffron exporters entry, then both Afghan and Iranian will be making profits of $1 million and $1 million, respectively. Finally, if Afghan Exporter does not enter the market at all, then Iranians will be making monopoly profits of $3.5 million.

Required: a) What would you do if you were the CEO of Afghan Saffron Exporter and Why, Explain briefly-use any practical approach or model discussed in the class to justify your response? b) If you were an Iranian Saffron Producer, Would you play aggressively or would you accommodate Afghan Exporters entry? c) What about if you were Iranian Saffron Exporters CEO?

You can answer any of above 3 a, b or c follow your role