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Instructions A night club owner has just changed ownership and the new owner has contracted G&B...

Instructions

A night club owner has just changed ownership and the new owner has contracted G&B consulting to help decide the direction the club will take. Based on the local music scene, it would make the most sense to book either rock bands or country bands. The new owner is aware that a competing night club is hoping to attract new customers while the new club is getting itself established. Since these are the only two night clubs in town competing to book the same bands, whatever market share is gained by one is lost by the other making this a zero-sum game. The new club owner has hired you to find the optimum strategy for this situation.

  1. Market research has determined the following changes in market shares based on the different combinations of music choices for the two clubs: if both clubs play country, the new club (Club 1) does very well with a 24% increase in market share.  If Club 1 plays country and the competing club (Club 2) plays rock, Club 2 gets a 12% increase in market share.  If these choices are reversed, Club 2 does even better and gets an 18% increase in the market share.  Lastly, if both clubs play rock, Club 1 does better and gets a 6% increase in market share. This results in the following payoff matrix:

Club 2

Club 1

Country

Rock

Country

(24, -24)

(-12, 12)

Rock

(-18, 18)

(6, -6)

-Use the payoff matrix to determine the optimum strategy for Club 2.

-Find and interpret the value of the game.

-Working in parallel your co-worker wants to make the recommendation that the new club owner should always follow the schedule shown below.  Do you agree or disagree with this strategy?  Explain your reasoning.

Wednesday

Thursday

Friday

Saturday

Sunday

Country

Rock

Country

Rock

Country
Math   Statistics-And-Probability   
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