Two Men's Clothing Stores That Compete for Most of the Market

Two men's clothing stores that compete for most of the market in a small town in Ohio and will choose their weekly advertising levels sequentially. The newspaper advertising department calls the clothing stores in alphabetical order to find out how much advertising each firm wishes to buy. Somehow - and nobody at the newspaper knows exactly how this happens - Arbuckle's advertising decision "leaks out" to Mr. B's, which then knows Arbuckle's advertising decision when it makes its advertising decision for the week.
The following payoff table facing the two firms, Arbuckle & Son and Mr. B's, shows the weekly profit outcomes for the various advertising decision combinations. The payoff table is common knowledge. Use this payoff table to construct the appropriate sequential decision on the blank game tree provided below. Then answer questions .
$\begin{array} { l } &\text {Mr: B's aavertisinglevel }\\ \text {Arbuckle \& Son advertising level }&\begin{array}{l|l|l|}& \text {High }& \text { Low }\\\hline High &\mathrm{A}&\mathrm{B}\\& {\$ 4,000, \$ 4,000} &{\$ 3,000, \$ 5,000} \\\hline Low &\mathrm{C}&\mathrm{D}\\&{\$ 5,000} \$ 3,000 & {\$ 3,500, \$ 3,500} \\\hline\end{array}\\\end{array}$

-When Arbuckle and Son makes its advertising decision first,

A) it need not consider what Mr. B's advertising decision will be since Arbuckle and Son cannot know what decision Mr. B will make.
B) the common knowledge that both managers have about the payoff table insures that Arbuckle will earn $5,000 of weekly profit.
C) it should use the roll-back method to insure that it will earn $5,000 of weekly profit.
D) all of the above.
E) none of the above