Lee and Cody are competitors.Each is considering whether to take aggressive action against the other or to cooperate.Cody can observe Lee's decision.Their decision tree can be diagrammed as follows:
Refer to the figure above.Suppose Cody tells Lee that any aggression on Lee's part will be met with aggression,but that if Lee cooperates,Cody will respond cooperatively.Cody's statement is:
A) a commitment device.
B) a non-credible threat and promise.
C) a description of the two equilibria for this game.
D) a credible threat and promise.

Question

Lee and Cody are competitors.Each is considering whether to take aggressive action against the other or to cooperate.Cody can observe Lee's decision.Their decision tree can be diagrammed as follows: 
Refer to the figure above.Suppose Cody tells Lee that any aggression on Lee's part will be met with aggression,but that if Lee cooperates,Cody will respond cooperatively.Cody's statement is:
A) a commitment device. 
B) a non-credible threat and promise. 
C) a description of the two equilibria for this game. 
D) a credible threat and promise.

Quizplus · Accepted Answer

Cody will choose the strategy that yields the higher payoff given the position Cody faces when choosing.Cody's statement violates this because the threat and promise would yield lower payoffs.

Lee and Cody Are Competitors