Question

Let me introduce you to Arlene, Boyd, Charlie, and Danielle. They signed up for a course in managerial economics and they have decided to offer you advice on the right answers to questions. This will work as follows:

First, I give you a question or scenario where you have to decide on an answer. You read it.

Second, take a look at the four answers given by our four intrepid students. Each will offer analysis of the question or scenario.

Third, decide which analyst you think has given the best answer. Choose that answer as your own!

The best answer will get full points. Usually, other answers may receive partial credit, though not all of them!

With that in mind, here is your first scenario!

The Japanese Navy in World War II needed to send reinforcements from Rabaul to Lae. They had a choice. They could sail their troop ships around the island of New Britain on the north side, through the Bismarck Sea, or they could sail on the south side through the Solomon Sea. The American forces know this as well, and must decide whether to deploy scouts to the north (Bismarck Sea) or the south (Solomon Sea). The sailing takes three days either way, but there is rain on the north side of the island, so it would take a day for the Americans to find the fleet.

If the Americans scout north and Japan sails north, the Americans will spend a day finding the Japanese and will get two days of bombing. If the Americans scout south and the Japanese sail north, the Americans will lose a day and only get one day of bombing. The weather is clearer on the south. If the Japanese sail south and the Americans scout north, the Americans get two days of bombing since they lose a day. If the Americans scout south, however, they will get three days of bombing. What should the Japanese commander do? How about the American? Briefly explain.

Each of our analysts offers you an answer. Choose the one you think is best.

Question 3 options:

A)

Arlene has modeled the situation with a matrix game. Based on her analysis, she believes that the United States has a dominant strategy of sending the scouts north, and with that in mind she believes it does not matter whether Japan sails north or south, since there will then be two days of bombing either way. Japan could essentially flip a coin!

B)	Boyd disagrees with Arlene and thinks that the United States has a dominant strategy to scout south, while Japan has a dominant strategy to sail south. They should both choose south and there will then be three days of bombing.

C)	Charlie has decided that both Arlene and Boyd are wrong, and that the United States does not have a dominant strategy at all. Charlie does, however, think Japan has a dominant strategy of sailing north. Based on that, the United States should scout north and there will be two days of bombing.

D)

Danielle doesn't think anyone has a dominant strategy. She has instead identified Japan sailing north and the United States scouting south as a saddle point and therefore as the correct result, with one day of bombing. Unfortunately (for Americans, anyway), that's the best the United States can guarantee.