Deliverable 02 Worksheet: Your Client Is Going To Be Traveli
Deliverable 02 Worksheetyour Client Is Going To Be Travelling To Las
Deliverable 02 – Worksheet Your client is going to be travelling to Las Vegas in the near future and he wants to place some bets on his favorite professional baseball team. To ensure he knows the odds on his bets he wants to know the probability of certain scenarios occurring. 1. Knowing that the team has won an average of 95 games over the past three seasons and that there are 162 games in a season, estimate the probability of the team winning any single game in the upcoming season. Enter your step-by-step answer and explanations here. 2. Using the information from number 1, determine the probability that the team will win exactly 100 games in the upcoming season. Enter your step-by-step answer and explanations here. 3. Using the information from number 1, determine the probability of the team winning at least 100 games in the upcoming season. Enter your step-by-step answer and explanations here. 4. Using the information from number 1, determine the probability of the team winning less than 100 games. Enter your step-by-step answer and explanations here. 5. Working in parallel with you, a coworker found the probability of the team winning less than 100 games to be 80.96%. Do these results match yours? If not, identify the error that was made. Enter your step-by-step answer and explanations here. 6. What assumptions must be made in this scenario that allow us to use a binomial distribution? What are some possible reasons why a binomial distribution may not accurately represent the scenario? Enter your step-by-step answer and explanations here. Deliverable 03 – Worksheet 1. Market research has determined estimates for each law firm’s expected profits for the various outcomes of this scenario. If both firms agree to the merger then each should individually expect a profit of 16 million in the next year. If our client agrees to the merger while the competitor does not, our client would expect profits of 8 million in the next year while the competitor would expect profits of 15 million. If the decisions were reversed then the payouts would also be reversed. If neither firm agrees to the merger then both would expect profits of 12 million in the next year. Construct a payoff matrix to represent the profits (in millions of dollars) for each firm under the different outcomes. Enter your step-by-step answer and explanations here. 2. Use the payoff matrix from number 1 to determine if a dominant strategy exists for either firm. Show all of your work. Enter your step-by-step answer and explanations here. 3. Use the payoff matrix from number 1 to determine any Nash equilibrium points. Show all of your work. Enter your step-by-step answer and explanations here. 4. Explain your recommendation to the client, citing your work from number 2 and number 3. Enter your step-by-step answer and explanations here. 5. Working in parallel your co-worker wants to make the recommendation that the client should agree to the merger no matter what as it will give the chance of obtaining the highest profits. Do you agree with this strategy? Explain why or why not. Enter your step-by-step answer and explanations here.
Paper For Above instruction
The given worksheet presents two distinct scenarios: one related to calculating probabilities for a baseball team's upcoming season and another concerning game theory analysis of a firm's strategic decisions regarding a merger. This paper will address each part systematically, providing detailed reasoning, calculations, and strategic analysis based on economic theories and probability principles.
Understanding Probabilities of Baseball Team Wins
The initial task involves estimating the probability that a baseball team, which has historically won an average of 95 games out of 162 over three seasons, will win any given game in the next season. Traditionally, the probability (p) of winning a single game can be approximated by dividing the historical average of wins by the total games played. Therefore, p = 95/162 ≈ 0.585.
This estimate assumes that past performance is indicative of future outcomes and that each game is an independent event with the same probability of winning. While this simplifies complex factors influencing game outcomes, it provides a foundational probability for further analysis.
Probability of Exactly 100 Wins
Given the estimated probability p ≈ 0.585 and the total of 162 games, we model the number of wins (X) using a binomial distribution: X ~ Binomial(n=162, p=0.585). The probability of exactly 100 wins is P(X=100), computed via the binomial probability formula:
P(X=100) = C(162, 100) (0.585)^100 (0.415)^{62}
where C(162, 100) denotes the binomial coefficient, representing the number of ways to choose 100 wins out of 162 games.
Calculating this exactly requires software or statistical tables; the binomial probability can be approximated using the normal approximation due to the large n, with mean μ = np ≈ 95.07 and variance σ^2 = np*(1-p) ≈ 37.6. The z-score for 100 wins is:
z = (100 + 0.5 - μ) / σ ≈ (100.5 - 95.07) / √37.6 ≈ 5.43 / 6.13 ≈ 0.886
Using standard normal tables, P(X=100) can be approximated by the density at z ≈ 0.886, giving an estimate for the probability.
Probability of Winning at Least 100 Games
The probability of winning at least 100 games is P(X ≥ 100), which equals 1 − P(X ≤ 99). Approximating using the normal distribution:
z = (99 + 0.5 - μ) / σ ≈ (99.5 - 95.07) / 6.13 ≈ 4.43 / 6.13 ≈ 0.722
Consulting normal distribution tables, P(Z ≤ 0.722) ≈ 0.764. Therefore, P(X ≥ 100) ≈ 1 - 0.764 = 0.236.
Probability of Less Than 100 Wins
Since the total probability sums to 1, P(X
Comparing Results with Coworker's Estimate
The coworker found the probability of winning less than 100 games to be 80.96%. Our approximation yields roughly 76.4%, indicating a difference likely due to approximation methods or rounding. The discrepancy may result from the normal approximation's limitations, especially in the tails of the binomial distribution.
Assumptions for Using Binomial Distribution & Its Limitations
Using a binomial distribution assumes each game's outcome is independent and identically distributed with the same probability p. It also assumes only two outcomes per trial — win or loss. In reality, factors such as player injuries, weather, and psychological effects can violate these assumptions. Additionally, the binomial distribution's accuracy diminishes if the probability p varies over time or if outcomes are correlated, which can occur in sports where momentum or team dynamics influence successive games.
Game Theory and Strategic Decision Making in Mergers
The second scenario involves constructing a payoff matrix for two firms contemplating a merger. When both agree, the payoff is 16 million; if one agrees and the other does not, the respective profits are 8 million and 15 million; if neither agrees, profits are 12 million each. The matrix helps analyze strategic behavior:
| Other Firm: Agree | Other Firm: Not Agree | |
|---|---|---|
| Our Firm: Agree | 16,16 | 8,15 |
| Our Firm: Not Agree | 15,8 | 12,12 |
A dominant strategy exists if a firm’s best response is to choose a particular action regardless of the other firm’s decision. For our firm, choosing to agree yields higher payoffs if the other agrees (16 vs. 12) and is better than not agreeing if the other does not (15 vs. 12). Similarly, for the other firm, the incentives align to favor agreement. Both firms have a dominant strategy to agree, leading to a Nash equilibrium at (Agree, Agree) with profits (16, 16).
However, real-world considerations such as payoff uncertainties or strategic complexities may complicate this analysis.
Conclusion and Recommendations
The analysis suggests that the firms have a strategic incentive to mutually agree on the merger, as it results in a Nash equilibrium with the highest combined profits. The client, in this scenario, should consider the stability of this equilibrium and potential externalities. The recommendation should emphasize the importance of cooperative strategies to maximize profit and safeguard against competitive retaliation.
While the co-worker’s suggestion that the client should always agree to the merger for highest profits seems logical within this simple framework, it’s prudent to evaluate possible risks, regulatory obstacles, and long-term strategic benefits before making a final decision.
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