Find the set of strategies that survive rationalizability

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Reference no: EM131246583

Popsicle Stands: Five lifeguard towers are lined up along a beach; the leftmost tower is number 1 and the rightmost tower is number 5. Two vendors, players 1 and 2, each have a popsicle stand that can be located next to one of five towers. There are 25 people located next to each tower, and each person will purchase a popsicle from the stand that is closest to him or her. That is, if player 1 locates his stand at tower 2 and player 2 at tower 3, then 50 people (at towers 1 and 2) will purchase from player 1, while 75 (from towers 3, 4, and 5) will purchase from vendor 2. Each purchase yields a profit of $1.

a. Specify the strategy set for each player. Are there any strictly dominated strategies?

b. Find the set of strategies that survive rationalizability.

Reference no: EM131246583

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