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.
-Suppose this customer is known to throw a fit and scare away other customers if charged high prices.If the shopkeeper moves first,he would ask for
A)A high price
B)A low price
C)A pony
D)All of the above

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.
-​Suppose this customer is known to throw a fit and scare away other customers if charged high prices.If the shopkeeper moves first,he would ask for
A)​A high price
B)A low price
C)A pony
D)​All of the above

Quizplus · Accepted Answer

If the shopkeeper asks for a high price, the customer may walk away and scare away other potential customers. On the other hand, if the shopkeeper asks for a low price, the customer is more likely to agree and make the purchase, avoiding any potential issues. Therefore, the best choice for the shopkeeper is to ask for a low price.

Use the Following Setup