use the following setup
Consider a sequential game between a shopkeeper and a haggling customer.The party who moves first chooses either a high price ($50)or low price ($20)and the second mover either agrees to the price or walks away from the deal and neither party gets anything.Ignore costs and assume the customer values the item at $60.
-If the customer moves first,with a low price what is the best response of the shopkeeper
A)Accept the low price
B)Walk away from the deal
C)Throw the haggling customer out of your store
D)Shut down your store

Question

use the following setup
Consider a sequential game between a shopkeeper and a haggling customer.The party who moves first chooses either a high price ($50)or low price ($20)and the second mover either agrees to the price or walks away from the deal and neither party gets anything.Ignore costs and assume the customer values the item at $60.
-​If the customer moves first,with a low price what is the best response of the shopkeeper
A)​Accept the low price
B)Walk away from the deal
C)Throw the haggling customer out of your store
D)​Shut down your store

Quizplus · Accepted Answer

Given the customer values the item at $60, if the customer offers a low price ($20), the best response for the shopkeeper is to accept the low price, as it still results in a sale rather than no transaction at all.

Use the Following Setup