The market research team working on this project creates this payoff matrix that represents the scaled values that customers give to the different levels of service and the corresponding payoffs for the telecom company:
You recognize that the payoff matrix is not the best way to analyze this scenario.You will construct a game tree to model the scenario and perform backwards induction to find the optimum strategy, explaining all of your reasoning along the way.
Slide 1
Explain why a game tree must be used in this scenario instead of a payoff matrix.
Identify who will go first in the game
Calculate the probability of getting a satisfied client based off of your prior work history at G& B Consulting.Show all work.
Explain how you found your solution.
Slide 2
Draw the game tree that represents the scenario using the payoff matrix given above.
Identify and explain any non-credible threats.
Using your prior work history, calculate the probability of getting at least 85% of clients giving you high customer satisfaction ratings.
Explain how you found your solution.
Slide 3
Redraw the game tree with any non-credible threats removed.
Identify and explain where the first step of backwards induction will occur.
Interpret your results from slide 2 and use them to make an argument on why you would be good for the position.
Slide 4
Using the game tree from slide 3, perform the first step of backwards induction.
Explain your reasoning behind the step you took.
Using the payoff matrix shown above, determine if the manufacturer has a dominant strategy.Show and explain all steps.
Using the payoff matrix shown above, determine if the competitor has a dominant strategy.Show and explain all steps.
Sample Solution