Scenario 13.16
Consider the pricing game below:
-Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,
A) Gooi will have to buy gelato machines, so Ici will get its highest possible profit.
B) Gooi will buy yogurt machines, which it otherwise wouldn't have, in order to retaliate.
C) the equilibrium payoff of ($50,$50) will be enforced.
D) Gooi will not change its behavior, because Ici's threat is not credible.
E) Gooi will threaten to buy yogurt machines, no matter what Ici does, to see whether that will get the people at Ici to change their minds.

Question

Scenario 13.16
Consider the pricing game below: 
-Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,
A) Gooi will have to buy gelato machines, so Ici will get its highest possible profit. 
B) Gooi will buy yogurt machines, which it otherwise wouldn't have, in order to retaliate. 
C) the equilibrium payoff of ($50,$50) will be enforced. 
D) Gooi will not change its behavior, because Ici's threat is not credible. 
E) Gooi will threaten to buy yogurt machines, no matter what Ici does, to see whether that will get the people at Ici to change their minds.

Quizplus · Accepted Answer

Ici's threat to buy yogurt machines is not credible because it goes against its best interest of getting the highest possible profit. Therefore, Gooi will not change its behavior in response to the threat.

Scenario 13.16 Consider the Pricing Game Below