Question

Use the following information to answer Questions 11 and 12. Two coffee houses near a college campus, the Coffee Club and the Rendezvous Room, compete for the same customers. To attract more customers, the Coffee Club is considering adding a blues musical group or a cheesecake counter. There is room to add only one of these. At the same time, the Rendezvous Room is considering adding a jazz musical group or a bagel counter. Again, there is only room to add one of these. The payoff matrix below shows the percentage increase in business for the Rendezvous Room for each adoption adopted by the coffeehouses. Their options are no change, add blues or jazz, or add cheesecake or bagels.

coffee club :
no change add blues add cheeseca
No Change [ 0 -10 15 ]
Rendezvous Room: Add Jazz [ 15 5 2 ]
Add Bagels [ 10 6 -5 ]

Answer 1

To determine the best choice for the Coffee Club and the Rendezvous Room, we need to evaluate the payoff matrix provided. Each cell represents the percentage increase in business for the Rendezvous Room based on the choice made by the Coffee Club. The best choice for the Coffee Club depends on their goal. If they want to benefit the most from the Rendezvous Room's loss, they should add blues. If they want to benefit the most from their own gain, they should add cheesecake.

Step-by-step explanation:

To determine the best choice for the Coffee Club and the Rendezvous Room, we need to evaluate the payoff matrix provided. Each cell represents the percentage increase in business for the Rendezvous Room based on the choice made by the Coffee Club.

Looking at the matrix, we can see that if the Coffee Club adds blues, the Rendezvous Room will experience a 10% decrease in business. If the Coffee Club adds cheesecake, the Rendezvous Room will see a 15% increase in business. Similarly, if the Rendezvous Room adds jazz, the Coffee Club will experience a 15% increase in business, while adding bagels will result in a 6% increase for the Coffee Club.

Based on these numbers, the best choice for the Coffee Club depends on its goal. If they want to benefit the most from the Rendezvous Room's loss, they should add blues. If they want to benefit the most from their own gain, they should add cheesecake. The same logic applies to the Rendezvous Room in choosing between jazz and bagels.