(Figure: Feely Mattress and Mealy Mattress I) Payoffs are profits in millions of dollars. Should Mealy Mattress develop its anti-bedbug mattress if Feely Mattress promises not to develop its own anti-bedbug mattress?
A) Yes, Feely's promise is credible, and Mealy's profits would increase from $6 million to $13 million.
B) Yes, Feely's promise is credible, and Mealy's profits would increase from $4 million to $13 million.
C) No, Feely's promise is not credible, so Mealy should not develop the anti-bedbug mattress and should earn $6 million.
D) No, Feely's promise is not credible, so Mealy should develop the anti-bedbug mattress and earn $13 million.

Question

(Figure: Feely Mattress and Mealy Mattress I) Payoffs are profits in millions of dollars.  Should Mealy Mattress develop its anti-bedbug mattress if Feely Mattress promises not to develop its own anti-bedbug mattress?
A) Yes, Feely's promise is credible, and Mealy's profits would increase from $6 million to $13 million. 
B) Yes, Feely's promise is credible, and Mealy's profits would increase from $4 million to $13 million. 
C) No, Feely's promise is not credible, so Mealy should not develop the anti-bedbug mattress and should earn $6 million. 
D) No, Feely's promise is not credible, so Mealy should develop the anti-bedbug mattress and earn $13 million.

Quizplus · Accepted Answer

The Answer of (Figure: Feely Mattress and Mealy Mattress I) Payoffs are profits in millions of dollars.  Should Mealy Mattress develop its anti-bedbug mattress if Feely Mattress promises not to develop its own anti-bedbug mattress?
A) Yes, Feely's promise is credible, and Mealy's profits would increase from $6 million to $13 million. 
B) Yes, Feely's promise is credible, and Mealy's profits would increase from $4 million to $13 million. 
C) No, Feely's promise is not credible, so Mealy should not develop the anti-bedbug mattress and should earn $6 million. 
D) No, Feely's promise is not credible, so Mealy should develop the anti-bedbug mattress and earn $13 million.

(Figure: Feely Mattress and Mealy Mattress I) Payoffs Are Profits