Game Theory

Two companies plan to establish a store in a populated province comprising of four municipalities. The population of each town and distance between towns are shown in the table below.

	Distance (in km)
	Town A	Town B	Town C	Town D	Population
Town A		8	6	10	35000
Town B			7	5	40000
Town C				4	25000
Town D					30000

If Company A is closer to the area, it captures 75% of the business. If Company B is closer to the area, it captures 70% of the business. However, if both companies locate in the same town, Company B captures 55% of the business. Setup the payoff matrix with Company B as row player. Company A Location Town A Town B Town C Town D Town A Company Town B B Town C Town D b) What type of game is played by the two companies? Answer either Pure or Mixed. c) What is the Minimax Value? d) What is the Maximin Value? e) Which company will have a better chance of getting better business in the province? Answer A or B. If Company A is closer to the area, it captures 75% of the business. If Company B is closer to the area, it captures 70% of the business. However, if both companies locate in the same town, Company B captures 55% of the business. Setup the payoff matrix with Company B as row player. Company A Location Town A Town B Town C Town D Town A Company Town B B Town C Town D b) What type of game is played by the two companies? Answer either Pure or Mixed. c) What is the Minimax Value? d) What is the Maximin Value? e) Which company will have a better chance of getting better business in the province? Answer A or B