Question
Memphis and San Antonio are professional soccer teams. Each team is trying to decide whether to hire a person in charge of analytics. An analytics
Memphis and San Antonio are professional soccer teams. Each team is trying to decide whether to hire a person in charge of analytics. An analytics specialist earns a salary of $100,000.
If neither team hires an analytics person, or if both teams hire an analytics person, the odds that Memphis will win the championship is 60%. If Memphis hires an analytics person, but San Antonio does not, Memphis's odds of winning rise to 80%. If San Antonio hires an analytics person, but Memphis does not, San Antonio's odds of winning rise to 60%.
The payoff for winning the championship(not including the analytics specialist's salary) is $500,000.
The payoff for the runner-up(not including the analytics specialist's salary) is $100,000.
a. Draw a matrix that shows each person's decision and the associated payoffs(including the analytics salary).
b. Does Memphis have a dominant strategy? Explain.
c. Does San Antonio have a dominant strategy? Explain.
d. Does a Nash equilibrium exist? If so, what is it? What is each team's expected payoff per player?
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