1. PROBLEM 4

2. Two major networks are competing for viewer ratings in the 8:00 -9:00pm and 9:00-10:00pm slots on a given weeknight. Each has two shows to fill this time period and is juggling its lineup. Each can choose to put its “bigger” show first or to place it second in the 9:00-10:00pm slot. The combination of decisions leads to the following “rating points” results:
NETWORK 1
NETWORK 2
FIRST
SECOND
20, 30
18, 18
15, 15
30, 10
a. Find the Nash equilibrium for this game, assuming that both networks make their decisions at the same time.
b. If each network is risk - averse and uses a maximin strategy, what will be the resulting equilibrium?
c. What will be the equilibrium if Network 1 makes its selection first? If Network 2 goes first?
d. Suppose the network managers meet to coordinate schedules and Network 1 promises to schedule its big show first. Its is promise incredible? What would be the likely outcome?

3. 20, 30 18, 18 15, 15 30, 10 First Network 2 choose first Network 1
a. Find the Nash equilibrium for this game, assuming that both networks make their decisions at the same time.
NETWORK 2
NETWORK 1
FIRST
SECOND
20, 30
18, 18
15, 15
30, 10
First
Network 2 choose first
Network 1
Second
Network 2 choose first
First
Network 1 choose first
Network 2
Second
Network 1 choose second
The Nash equilibrium is (First, first), yielding a payoff of (20,30).
There is no incentive for either party to change from this outcome

4. b. If each network is risk - averse and uses a maximin strategy, what will be the resulting equilibrium?
NETWORK 2
NETWORK 1
FIRST
SECOND
20, 30
18, 18
15, 15
30, 10
First 18
Under maximin, Network 1 plays First
Network 1
the worst payoff 15
Second
First 15
Under maximin, Network 2 plays First
Network 2
Second 10
The maximin equilibrium is (First, First) with a payoff of (20,30)

5. 20, 30 18, 18 15, 15 30, 10 First First Network 2 Network 1 Second
c. What will be the equilibrium if Network 1 makes its selection first? If Network 2 goes first?
NETWORK 2
NETWORK 1
FIRST
SECOND
20, 30
18, 18
15, 15
30, 10
First
First
Network 2
20, 30
Network 1
Second
First
15, 15
Network 2
Therefore, if Network 1 has the first move, it will play First, and the resulting equilibrium will be (First, first)
First
First
Network 1
20, 30
Network 2
Second
Second
Network 1
30, 10
Therefore, if Network 2 has the first move, it will play First, and the resulting equilibrium will be (First, first)

6. d. Suppose the network managers meet to coordinate schedules and Network 1 promises to schedule its big show first. Its is promise incredible? What would be the likely outcome?
NETWORK 2
NETWORK 1
FIRST
SECOND
20, 30
18, 18
15, 15
30, 10
After inspecting all cases, the combination (first, first) is the best result for Network 1, so he have no incentive to change
This promise is credible. In this case (first, first), the outcome would be (20,30)