Cities around the world have experienced a phenomenon where a dilapidated part of town undergoes a...
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Cities around the world have experienced a phenomenon where a dilapidated part of town undergoes a rejuvenation or economic revitalization. Attracted by low real estate costs and being off the beaten path, trendy shops and avant-garde restaurants begin popping up in these areas. As the momentum builds, it can transform a once undervalued area into a hot bed of economic activity. Imagine yourself as a business owner contemplating where to open an additional location. One possibility is opening in an area experiencing a resurgence like the one described above. However, the resurgence is far from assured, let alone complete. Other businesses are making similar assessments that you are not privy to. If more businesses also decide to open in the area, then your available customer base is likely to increase as more people visit and the area becomes trendier. If these other businesses decide to forego this location, then the revitalization is liable to lose momentum and founder, leaving you stuck with debt and a wasted opportunity. R = Open in the possibly resurging location L = Do not open in the possibly resurging location (a) Which of the following multiplayer game models represents this situation? Why? 1 2 3 Payoff R # Choosing R n Payoff R #Choosing R 11 Payoff R # Choosing R 71 (b) What are the equilibria of your chosen game? Which are stable and unstable? Why? (c) Could this be represented as a Schelling critical mass game? If so, please draw the model (label equilibria as needed) and justify why. (d) Describe an exogenous shock that might sway you and your fellow business owners' decision about opening in the area. Cities around the world have experienced a phenomenon where a dilapidated part of town undergoes a rejuvenation or economic revitalization. Attracted by low real estate costs and being off the beaten path, trendy shops and avant-garde restaurants begin popping up in these areas. As the momentum builds, it can transform a once undervalued area into a hot bed of economic activity. Imagine yourself as a business owner contemplating where to open an additional location. One possibility is opening in an area experiencing a resurgence like the one described above. However, the resurgence is far from assured, let alone complete. Other businesses are making similar assessments that you are not privy to. If more businesses also decide to open in the area, then your available customer base is likely to increase as more people visit and the area becomes trendier. If these other businesses decide to forego this location, then the revitalization is liable to lose momentum and founder, leaving you stuck with debt and a wasted opportunity. R = Open in the possibly resurging location L = Do not open in the possibly resurging location (a) Which of the following multiplayer game models represents this situation? Why? 1 2 3 Payoff R # Choosing R n Payoff R #Choosing R 11 Payoff R # Choosing R 71 (b) What are the equilibria of your chosen game? Which are stable and unstable? Why? (c) Could this be represented as a Schelling critical mass game? If so, please draw the model (label equilibria as needed) and justify why. (d) Describe an exogenous shock that might sway you and your fellow business owners' decision about opening in the area.
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Answer a I think second2 multiplayer game model represent this situation because if you are ... View the full answer
Related Book For
Income Tax Fundamentals 2013
ISBN: 9781285586618
31st Edition
Authors: Gerald E. Whittenburg, Martha Altus Buller, Steven L Gill
Posted Date:
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