Two hotels are considering a location along a newly constructed highway through the desert. The highway is
Question:
Two hotels are considering a location along a newly constructed highway through the desert. The highway is 500 km long with an exit every 50 km (including both ends). The hotels may choose to locate at any exit. These will be the only hotels for any traveler using the highway. Each traveler has their own most preferred location along the highway (at some exit) for a hotel, and will choose to go to the hotel closest to that location.Travelers’ most preferred locations are distributed evenly, so that each exit has the same number of travelers who prefer that exit. If both hotels are at the same distance form a traveler’s preferred location, then that traveler flips a coin to determine which hotel to stay at. A hotel would each like to maximize the number of travelers who stay at it
Which pairs of locations form Nash equilibria?
Expert Answer:
As is given in the question the total length of highway is 500 kms There is exit at every 50 kms As ... View the full answer
