A firm that establishes a reputation for aggressive and irrational behavior may be attempting to establish a credible threat to its competitors.

Question

Quizplus · Accepted Answer

A firm may adopt aggressive and irrational behavior as a strategic move to signal to its competitors that it is willing to incur significant costs to defend its market position or to expand, thereby establishing a credible threat that can deter competitors from taking actions that are unfavorable to the firm. This can be part of a broader strategy to influence competitors' perceptions and actions in the market.

A Firm That Establishes a Reputation for Aggressive and Irrational