Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if it will offer a warranty or not. The pay-offs of each firm's strategy is a function of their competitor as well. The pay-off matrix is presented below.
If firm #1 announces they will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

Question

Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if it will offer a warranty or not. The pay-offs of each firm's strategy is a function of their competitor as well. The pay-off matrix is presented below.  
If firm #1 announces they will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

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The Answer of Two firms in a local market compete in the manufacture of cyberwidgets. Each firm must decide if it will offer a warranty or not. The pay-offs of each firm's strategy is a function of their competitor as well. The pay-off matrix is presented below.  
If firm #1 announces they will offer a warranty regardless of what firm #2 does, is this a credible threat? Why or why not?

Two Firms in a Local Market Compete in the Manufacture