Question

14)There are two independent dealers for Sporto automobiles in a large city. The dealers decide to run

a cooperative advertising campaign in which both dealers are listed in local newspapers ads, and

they can purchase larger ads that are more likely to attract attention and generate more auto sales if

the dealers commit more funds to the joint advertising budget. Is this an example of a cooperative

constant-sum game?

A)Yes, all negotiated outcomes between two firms are cooperative and constant-sum situations.

B)No, the firms are independent, so their interaction cannot be cooperative.

C)Yes, each firm can contribute zero to 100 percent of the advertising budget, so this is a constant-sum game.

D)No, the outcome of the advertising campaign depends on how much money the firms contribute to the campaign, so it is not constant sum.

Answer 1

Option D

Constant sum game is a game which includes competition . It is a game where the wealth of all the players in the game are combined and it remains as a constant and in other words the total sum of amounts won by some of the players will be equal to the total amounts lost by the players . In this game , even though the individual wealth of players keep shifting dynamically , the combined wealth of all the players remain constant throughout the game . An example of constant sum game is a Poker game .