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 shopkeeper goes first and quotes a low price,what is the best response of the customer?
A)Accept the low price happily
B)Walk away from the deal
C)Slam the storeowner's door on the way out
D)Laugh at the storeowner

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 shopkeeper goes first and quotes a low price,what is the best response of the customer?
A)​Accept the low price happily
B)Walk away from the deal
C)Slam the storeowner's door on the way out
D)​Laugh at the storeowner

Quizplus · Accepted Answer

Since the customer values the item at $60 and the shopkeeper offers it for $20, accepting the low price maximizes the customer's surplus.

Use the Following Setup