IES Management College and Research Centre

Tutorial

1. Two companies A and B, competing for the same product are sharing a market. Each of these attempts
to raise its share of the market. The pay off matrix in terms of their advertisising plan is a s follows:

Use dominance rules to suggest the optimal strategies for the two competitors and the net outcome
thereof.

Player A/B B1 B2 B3 B4 B5

A1 1 3 3 6 3 2. Use
dominance
A2 5 6 3 7 8 rules to
A3 6 7 9 8 7 reduce the
size of the
A4 4 2 8 4 3 following
pay off
matrix and hence find the optimal strategies and value of game:

Bs Strategy
As
B1 B2 B3
Strategy
9 8 -7

A1 3 -6 4

6 7 -7
A2

A3

3.Two companies A and B, competing for the same product are sharing a market. Each of these attempts
to raise its share of the market. The pay off matrix in terms of their advertisising plan is a s follows:

Use dominance rules to suggest the optimal strategies for the two competitors and the net outcome
thereof.

Player A/B B1 B2 B3 B4 B5

A1 2 4 2 4 1 4. Assume
that two
A2 5 6 3 7 8

A3 6 7 9 8 7

A4 4 2 8 4 3
firms are competing for market share for a particular product. Each firm is considering what promotional
strategy to employ for the coming period. Assuming pay-off matrix ,describe the increase in market share
for firm A and decrease in market share for firm B:

Firm Bs strategy

Firm As strategy No promotion Moderate promotion Price cut

No promotion 15 -8 -2
Moderate promotion 6 7 4
Price cut -8 -6 2
Now

( i) Determine the optimal strategies for both the firms,

( ii ) Determine the value of this game ( Using Dominance Rule )

5.Solve the following games, hence find the optimal strategies and value of game:

a) Player A/B B1 B2 B3 B4
b) A1 3 2 4 0
A2 3 4 2 4
Player A/B A3 B1 4 B2 2 B3 4 0
A1 A4 -3 1 -2 4 4 0 8
A2 -1 4 2

A3 2 2 6
c)

Pl B
ay 4 B1 B2 B3 B4
er
A/
B
A 8
1
A 7
2
A 8
3
A 4
4
Player A/B
A1 8 10 9 14
A2 10 11 8 12
A3 13 12 14 13