Kamau and Njoroge are two cousins specializing in hawking business along River road. Kamau specializes in second hand shirts while Njoroge specializes in cheap electronic goods. However, sales have...


Kamau and Njoroge are two cousins specializing in hawking business along River road. Kamau specializes in second hand shirts while Njoroge specializes in cheap electronic goods. However, sales have been decreasing partly due to the harsh economic condition in Kenya and partly due to restrictions by the City Council.Each of the cousins is considering expanding to include in their lines of business, items on which their rivals now have a monopoly. Each knows that the other is considering this expansion and this influences each of their decisions.Kamau figures out that if he does not expand his business and his cousin does, it will hurt his trade by Sh.500 of profit per day. If neither of them expands inventory to include the extra product, Kamau thinks it will boost his net profit by Sh.500 per day due to his superior location. If he expands and his cousin does also, he believes the combination of location and expanded inventory will increase his profits by Sh.1,000 per day. However, if he alone expands and his cousin does not, this will result in no net increase in business.Required:Prepare a game matrix and show that a pure strategy does not exist. (4 marks)Solve the above game to determine the average winnings (or losses) each of the cousins would expect. (8 marks)



May 15, 2022
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