MGMT511 - Quantitative Methods in Business Assignment

Assignment Task

Bader and Abdullah both have a KD 5 and a KD 1 bill in a game. Each player selects one of the bills without the other player knowing the bill selected. Simultaneously they both reveal the bills selected. If the bills do not match, Abdullah wins Bader's bill. If the bills match, Bader wins Abdullah's bill.

1. Develop the game theory table for this game. The values should be expressed as the gains (or losses) for Abdullah.

2. Is there a pure strategy? Why or why not?

3. Determine the optimal strategies and the value of this game. Does the game favor one player over the other?

4. Suppose Bader decides to deviate from the optimal strategy and begins playing each bill 50% of the time. What should Abdullah do to improve his winnings? Comment on why it is important to follow an optimal game theory strategy.

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