A town has only two banks, bank R and bank C, and both compete equally for the town’s business. Every week, each bank decides on the use of one, and only one, of the following means of promotion: TV, radio, newspaper, and mail. A market research firm provided the following payoff matrix, which indicates the percentage of market gain or loss for each choice of action by R and by C (we assume that any gain by R is a loss by C, and vice versa):

(A) Find optimal strategies for bank R and bank C. What is the value of the game?

(B) What is the expected value of the game for R if bank R always chooses TV and bank C uses its optimal strategy?

(C) What is the expected value of the game for R if bank C always chooses radio and bank R uses its optimal strategy?

(D) What is the expected value of the game for R if both banks always use the newspaper?

Transcribed Image Text:

R TV TV 0 Radio 1 Paper 0 Mail -1 Radio -1 2 - 1 - 1 C Paper -1 -1 0 -1 Mail 0 - 1 0