The mangers of Healthy Snacks and Healthy Bars are engaged in a strategic interaction in which their interests are aligned, but there is more than one possible equilibrium. All of the following can help the managers determine the equilibrium outcome except which one?

Question

Quizplus · Accepted Answer

Unpredictable strategies cannot help the managers determine the equilibrium outcome as they introduce uncertainty and make it difficult to predict how the other firm will respond. The Pareto criterion, a focal point, and an announcement made by either firm regarding their future plans can all help the managers determine the equilibrium outcome. The Pareto criterion helps identify outcomes that are mutually beneficial for both firms, a focal point provides a clear and distinct option for each firm to choose, and an announcement can provide information about the other firm's intentions and possible strategies.

The Mangers of Healthy Snacks and Healthy Bars Are Engaged