It's September 2021, and two rival Hollywood movie studios - Robert's Laff Riots (RLR) and Charlie's...

 

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It's September 2021, and two rival Hollywood movie studios - Robert's Laff Riots (RLR) and Charlie's Flicks Inc. (CFI)- are trying to decide which month to schedule for the opening of each studio's blockbuster hit movie. (RLR's movie is "Getting Grannie's Goat"; CFI's movie is "Weirdness Strikes Back".) They each know that the months toward the end of the calendar year are the best for opening movies of these kinds. Each studio also knows that the aggregate profits that it will earn from its own movie depends on which month it chooses for its movie and also which month the other studio chooses for its movie. The expected aggregate profits (in $ millions) for each studio, in relation to the month that each studio chooses for its movie opening, are as follows: RLR's choice CFI's choice RLR's profits CFI's profits Oct Oct $40 $50 Oct Nov 80 80 Oct 100 120 Nov Nov Nov Dec Dec Dec Dec Oct Nov Dec Oct Nov Dec 60 40 60 120 80 60 60 70 100 70 80 70 Because Hollywood is a gossipy town, these profit figures are well known by everyone. Both Robert and Charlie (the CEOs of the two studios) have MBAs from a prestigious business school located in Greenwich Village, and each CEO is concerned solely with his own company's profitability. 1. Suppose that both studios must announce their opening month simultaneously at a Palm Springs film festival in September; and once announced, they are firmly committed to that month (because of scheduling issues with the theatres/exhibitors). What month will each studio announce? Explain your answer. (6 points) 2. The executives at RLR are trying to decide whether it makes sense (a) to announce their choice of month before CFI makes its choice ("first mover advantage"); or (b) to wait until after CFI makes its choice ("second mover advantage"); or (c) there's no advantage either way, and RLR should just go ahead and announce simultaneously with CFI. If RLR were to ask you to help them with this question, what would your advice be? Explain. (6 points) It's September 2021, and two rival Hollywood movie studios - Robert's Laff Riots (RLR) and Charlie's Flicks Inc. (CFI)- are trying to decide which month to schedule for the opening of each studio's blockbuster hit movie. (RLR's movie is "Getting Grannie's Goat"; CFI's movie is "Weirdness Strikes Back".) They each know that the months toward the end of the calendar year are the best for opening movies of these kinds. Each studio also knows that the aggregate profits that it will earn from its own movie depends on which month it chooses for its movie and also which month the other studio chooses for its movie. The expected aggregate profits (in $ millions) for each studio, in relation to the month that each studio chooses for its movie opening, are as follows: RLR's choice CFI's choice RLR's profits CFI's profits Oct Oct $40 $50 Oct Nov 80 80 Oct 100 120 Nov Nov Nov Dec Dec Dec Dec Oct Nov Dec Oct Nov Dec 60 40 60 120 80 60 60 70 100 70 80 70 Because Hollywood is a gossipy town, these profit figures are well known by everyone. Both Robert and Charlie (the CEOs of the two studios) have MBAs from a prestigious business school located in Greenwich Village, and each CEO is concerned solely with his own company's profitability. 1. Suppose that both studios must announce their opening month simultaneously at a Palm Springs film festival in September; and once announced, they are firmly committed to that month (because of scheduling issues with the theatres/exhibitors). What month will each studio announce? Explain your answer. (6 points) 2. The executives at RLR are trying to decide whether it makes sense (a) to announce their choice of month before CFI makes its choice ("first mover advantage"); or (b) to wait until after CFI makes its choice ("second mover advantage"); or (c) there's no advantage either way, and RLR should just go ahead and announce simultaneously with CFI. If RLR were to ask you to help them with this question, what would your advice be? Explain. (6 points) It's September 2021, and two rival Hollywood movie studios - Robert's Laff Riots (RLR) and Charlie's Flicks Inc. (CFI)- are trying to decide which month to schedule for the opening of each studio's blockbuster hit movie. (RLR's movie is "Getting Grannie's Goat"; CFI's movie is "Weirdness Strikes Back".) They each know that the months toward the end of the calendar year are the best for opening movies of these kinds. Each studio also knows that the aggregate profits that it will earn from its own movie depends on which month it chooses for its movie and also which month the other studio chooses for its movie. The expected aggregate profits (in $ millions) for each studio, in relation to the month that each studio chooses for its movie opening, are as follows: RLR's choice CFI's choice RLR's profits CFI's profits Oct Oct $40 $50 Oct Nov 80 80 Oct 100 120 Nov Nov Nov Dec Dec Dec Dec Oct Nov Dec Oct Nov Dec 60 40 60 120 80 60 60 70 100 70 80 70 Because Hollywood is a gossipy town, these profit figures are well known by everyone. Both Robert and Charlie (the CEOs of the two studios) have MBAs from a prestigious business school located in Greenwich Village, and each CEO is concerned solely with his own company's profitability. 1. Suppose that both studios must announce their opening month simultaneously at a Palm Springs film festival in September; and once announced, they are firmly committed to that month (because of scheduling issues with the theatres/exhibitors). What month will each studio announce? Explain your answer. (6 points) 2. The executives at RLR are trying to decide whether it makes sense (a) to announce their choice of month before CFI makes its choice ("first mover advantage"); or (b) to wait until after CFI makes its choice ("second mover advantage"); or (c) there's no advantage either way, and RLR should just go ahead and announce simultaneously with CFI. If RLR were to ask you to help them with this question, what would your advice be? Explain. (6 points)

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The scenario you described is a classic example of a noncooperative game where two players Robert and Charlie the CEOs of rival movie studios make dec... View the full answer