Lithography is a process by which the artist creates a design on stone or plate, and then prints artwork. Buyers of lithographs worry that the artist would print more copies in the future. Suppose that a well-known gallery promises to buy back the artist's prints at the original price. If the artist prints more copies, buyers can sell their purchases back to the gallery. Use game theory to explain.

Question

Quizplus · Accepted Answer

The buyback offer is a strategic move because it influences the buyers' expectations and decisions. It is also a promise (conditional strategic move) because the gallery commits to buying back the prints if more copies are printed, thus reducing the risk for buyers.

Lithography Is a Process by Which the Artist Creates a Design