(Table: TriStar Pictures and New Line Cinema I) Payoffs represent profits in millions of dollars. In this simultaneous game, TriStar and New Line Cinema both decide the genre of their summer movie release. TriStar prefers to release a superhero movie and New Line Cinema releases a comedy. TriStar enters into an irrevocable contract that will provide penalty payments to theater chains if it releases a summer comedy. These penalty payments serve as a credible commitment to TriStar's desire to release a superhero movie. How large do these penalty payments have to be to convince New Line Cinema that TriStar will release a superhero movie?
A) between $1 million and $5 million
B) greater than $5 million
C) at least $90 million
D) less than $95 million

Question

(Table: TriStar Pictures and New Line Cinema I)  Payoffs represent profits in millions of dollars. In this simultaneous game, TriStar and New Line Cinema both decide the genre of their summer movie release. TriStar prefers to release a superhero movie and New Line Cinema releases a comedy. TriStar enters into an irrevocable contract that will provide penalty payments to theater chains if it releases a summer comedy. These penalty payments serve as a credible commitment to TriStar's desire to release a superhero movie. How large do these penalty payments have to be to convince New Line Cinema that TriStar will release a superhero movie?
A) between $1 million and $5 million 
B) greater than $5 million 
C) at least $90 million 
D) less than $95 million

Quizplus · Accepted Answer

The Answer of (Table: TriStar Pictures and New Line Cinema I)  Payoffs represent profits in millions of dollars. In this simultaneous game, TriStar and New Line Cinema both decide the genre of their summer movie release. TriStar prefers to release a superhero movie and New Line Cinema releases a comedy. TriStar enters into an irrevocable contract that will provide penalty payments to theater chains if it releases a summer comedy. These penalty payments serve as a credible commitment to TriStar's desire to release a superhero movie. How large do these penalty payments have to be to convince New Line Cinema that TriStar will release a superhero movie?
A) between $1 million and $5 million 
B) greater than $5 million 
C) at least $90 million 
D) less than $95 million