-Consider the oil-drilling game in Figure 6.6. Payoffs are in millions of dollars. If both oil-drilling companies adopt its optimal mixing rule, GLOMAR's expected payoff is:
A) $42 million.
B) $58 million.
C) $64 million.
D) $76 million.
E) None of the above.

Question

-Consider the oil-drilling game in Figure 6.6. Payoffs are in millions of dollars. If both oil-drilling companies adopt its optimal mixing rule, GLOMAR's expected payoff is:
A) $42 million. 
B) $58 million. 
C) $64 million. 
D) $76 million. 
E) None of the above.

Quizplus · Accepted Answer

GLOMAR's optimal mixing rule is to drill with probability 1/2. EXXON's optimal mixing rule is to drill with probability 1/4. Therefore, GLOMAR's expected payoff is (1/2) * (100) + (1/2) * (20) = $60 million.

-Consider the Oil-Drilling Game in Figure 6