Rainbow Writer (RW) is a small online company selling a highly rated software package for printing color labels directly onto CDs. The firm currently earns a profit of $2 million per year selling its package exclusively on its website. Odeon, the producer of the most popular software package for editing and burning CDs and DVDs, has expressed interest in bundling Rainbow Writer's product into its own package. Odeon expects that bundling would further boost its sales and allow it to sell the new bundled product at a higher price, thus raising its profits beyond its current profit of $12 million. Figure 10-4 shows the decision tree for the Rainbow Writer-Odeon bargaining game.
-Refer to Figure 10 -4. In a real world situation involving Rainbow Writer and Odeon, what scenario below might permit Rainbow Writer to rationally refuse an offer from Odeon of $40 per copy of the software package?
A) Odeon hires a software developer to begin developing its own proprietary color labeling software.
B) Odeon's competitors are also interested in bundling Rainbow Writer's software.
C) Odeon is also negotiating with Swift Colors, Rainbow Writer's chief rival.
D) Odeon is considering new distribution outlets for its products.
Correct Answer:
Verified
