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 high price what is the best response of the shopkeeper
A)Accept the high price happily
B)Walk away from the deal
C)Throw the haggling customer out of your store
D)Laugh at the customer's face

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 high price what is the best response of the shopkeeper
A)​Accept the high price happily
B)Walk away from the deal
C)Throw the haggling customer out of your store
D)​Laugh at the customer's face

Quizplus · Accepted Answer

Given the customer values the item at $60, if they offer a high price, the best response for the shopkeeper is to accept it happily, as it maximizes the shopkeeper's profit.

Use the Following Setup