Problem
The profits of the four major networks (CBS, NBC, ABC and Fox) depend significantly on the ratings of its prime time shows. The higher the ratings, the higher the price the network can charge for advertising and the higher the profits of the network. To keep things simple, we will focus on two networks, CBS and NBC, and two of the prime time spots, 8-9PM and 9-10PM.
Each network needs to decide which time slot to place its hit show, 8-9PM or 9-10PM. The other time slot will be filled by a run of the mill show.
The following payoff matrix shows the total number of viewers (in millions) if each network places its hit show in each of the time slots:
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CBS
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|
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8-9PM time slot
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9-10PM time slot
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NBC
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8-9PM time slot
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36, 33
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39, 28
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|
9-10PM time slot
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30, 36
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32, 30
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If you are the program manager for CBS, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why.
If you are the program manager for NBC, what time slot would you place your hit TV show (assuming that your goal is to maximize the number of viewers)? Please explain why.
Using the payoff matrix above, is there an incentive for NBC and CBS to collude and agree to put their hit shows in different time slots? Explain your answer.
Now suppose the payoff for CBS in the 8-9PM time slot was changed from 33 to 27, as shown below:
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CBS
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|
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8-9PM time slot
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9-10PM time slot
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NBC
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8-9PM time slot
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36, 27
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39, 28
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|
9-10PM time slot
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30, 36
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32, 30
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Using the payoff matrix directly above, would your answers to parts 1. and 2. above change? Put another way, what time slots would you place your hit TV show if you were the Program Manager for CBS and if you were the Program Manager for NBC? Explain why (using numbers).
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.