Heavy Lifting - thoughts and web finds by an economist
     I also contribute to Division of Labour Load HL's Front Page
Friday, February 02, 2007

Microeconomics quiz of the week

From the WSJ's professorjournal.com comes one of my favorite stories to date:
"With the number of charity balls on the rise -- there will be more than 100 fund-raising events in Palm Beach, Fla., alone this winter-spring season -- retailers and designers are creating complex new customer-tracking systems to avoid an age-old problem: a party-goer showing up for a gala in the same high-end gown as another guest." The article reports on actions that dress shop owners take to reduce the probability that two women attend the same even in identical dresses. These actions include keeping track of where their customers intend to wear particular gowns and then sharing that information with other stores. The article also reports that some women are purchasing one-of-a-kind gowns to ensure that others would not be wearing the same dress.

QUESTIONS:
1.) Why are dress shop owners willing to sacrifice the sale of dress so as to insure that two women do not wear the same dress to the same event?

2.) Consider a game in which two women simultaneously choose whether to purchase and wear a red gown or a blue gown. Each woman has utility of 10 from being the only woman who wears the red dress and utility 5 from being the only woman wearing the blue dress. If the women dress alike, each has utility 0. Is the game like a "battle of the sexes"? What are the pure strategy Nash equilibria? What is the mixed strategy Nash equilibrium?

3.) Consider a game in which two women simultaneously choose whether to purchase and wear a red gown or a blue gown. Each woman has utility of x from being the only woman who wears the red dress and utility x from being the only woman wearing the blue dress. If both wear the red dress, then each has utility x-z; and if both wear the blue dress, then each has utility y-z. What is the range of z for where there is a Nash equilibrium in which one woman wears the red dress and the other wears the blue dress? Relate this range of z to the women's preferences.


Reviewed By: James Dearden, Lehigh University

Comments: Post a Comment



Purchase




Le Chai - galerie du vin



Support



Popularity

Posts that contain Craig Depken per day for the last 90 days.



Contacts

Heavy Lifting's Main Page
Email Me
Atom Feed

WWW
Heavy Lifting




Great Links

Money I Found Today

Heavy Lifting - Firehose style (56k warning)



Recent Posts

- Microeconomics quiz of the week




Archives


home


Visitors
Site Meter Blogroll Me!



Credits

Modified maystar design
powered by blogger