Scenario 13.16
Consider the pricing game below:
-Refer to Scenario 13.16. If Gooi can move first, and Ici wants to realize the ($150, $300) payoff,
A) all it has to do is threaten to buy yogurt machines, no matter what Gooi does.
B) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $50.
C) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $150.
D) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $300.
E) it has to move before Gooi; there is no other way.

Question

Scenario 13.16
Consider the pricing game below: 
-Refer to Scenario 13.16. If Gooi can move first, and Ici wants to realize the ($150, $300) payoff,
A) all it has to do is threaten to buy yogurt machines, no matter what Gooi does. 
B) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $50. 
C) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $150. 
D) it could make its threat credible by rearranging its physical plant so that the installation of gelato machines by Gooi would bring in profit less than $300. 
E) it has to move before Gooi; there is no other way.

Quizplus · Accepted Answer

Ici wants to realize the ($150, $300) payoff, which means it wants to ensure that both players choose the "Gelato Machines" option. In order to achieve this, Ici must make its threat to buy "Yogurt Machines" credible. Ici can do this by rearranging its physical plant so that the installation of "Gelato Machines" by Gooi would bring in profit less than $50. This makes it more likely that Gooi will choose the "Yogurt Machines" option and Ici can then choose "Gelato Machines" to realize the desired payoff.

Scenario 13.16 Consider the Pricing Game Below