(Table: Callaway Golf Shoes I) The table shows consumer valuations for two types of Callaway golf shoes.
a. Suppose Callaway prices the C-Tech shoes at $85 and the Xtreme shoes at $125. Show that this pricing scheme is incentive-compatible.
b. Suppose Callaway prices the C-Tech shoes at $70 and the Xtreme shoes at $125. Show that this pricing scheme is NOT incentive-compatible.

Question

(Table: Callaway Golf Shoes I) The table shows consumer valuations for two types of Callaway golf shoes.  
a. Suppose Callaway prices the C-Tech shoes at $85 and the Xtreme shoes at $125. Show that this pricing scheme is incentive-compatible.
b. Suppose Callaway prices the C-Tech shoes at $70 and the Xtreme shoes at $125. Show that this pricing scheme is NOT incentive-compatible.

Quizplus · Accepted Answer

The Answer of (Table: Callaway Golf Shoes I) The table shows consumer valuations for two types of Callaway golf shoes.  
a. Suppose Callaway prices the C-Tech shoes at $85 and the Xtreme shoes at $125. Show that this pricing scheme is incentive-compatible.
b. Suppose Callaway prices the C-Tech shoes at $70 and the Xtreme shoes at $125. Show that this pricing scheme is NOT incentive-compatible.

(Table: Callaway Golf Shoes I) the Table Shows Consumer Valuations