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.
-Would the customer be able to convince the shopkeeper that he would walk out if he receives a high price?
A)Yes,because walking out is most profitable move for the customer
B)No,because walking out is an unprofitable strategy for the customer
C)No,because walking out is not a credible threat
D)Both B&C

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.
-​Would the customer be able to convince the shopkeeper that he would walk out if he receives a high price?
A)​Yes,because walking out is most profitable move for the customer
B)No,because walking out is an unprofitable strategy for the customer
C)No,because walking out is not a credible threat
D)​Both B&C

Quizplus · Accepted Answer

The customer values the item at $60, so walking away from a high price of $50 would not be a profitable move, making it an unprofitable strategy. Additionally, since the customer actually values the item more than the high price, walking out is not a credible threat, as it would not be in the customer's best interest to do so.

Use the Following Setup