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The hotels are considering a location along a newly constructed highway through the desert. The highway is 500 miles along with an exit every 50
The hotels are considering a location along a newly constructed highway through the desert. The highway is 500 miles along with an exit every 50 miles (including both ends). The hotels may choose to locate at any exit.These will be the only hotels for any traveler using the highway. Each traveler has their own most preferred location along the highway (at some exit) for a hotel, and will choose to go the hotel closest to that location. Travelers most preferred locations are distributed evenly, so that each exit has the same number of travelers who prefer that exit. If both hotels are the same distance from a traveler's most preferred location, then that traveler ips a coin to determine which hotel to stay at. A hotel would each like to maximize the number of travelers who stay at it. If Hotel 1 locates at the 100 mile exit, where should Hotel 2 locate? Given Hotel 2's location that you just found, where would Hotel I prefer to locate? Which pair of locations form Nash equilibrium? (3 points)
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