The managers of Alpha and Beta must make repeated advertising decisions simultaneously at the beginning of every month.They choose either low or high levels of advertising expenditure.They both employ a discount rate of 2.5 percent per month. Beta expects punishment to last for two months after being caught i.e.,to be penalized in months 2 and 3).What would be the value-maximizing decision for Beta?

Question

The managers of Alpha and Beta must make repeated advertising decisions simultaneously at the beginning of every month.They choose either low or high levels of advertising expenditure.They both employ a discount rate of 2.5 percent per month.  Beta expects punishment to last for two months after being caught i.e.,to be penalized in months 2 and 3).What would be the value-maximizing decision for Beta?

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The Answer of The managers of Alpha and Beta must make repeated advertising decisions simultaneously at the beginning of every month.They choose either low or high levels of advertising expenditure.They both employ a discount rate of 2.5 percent per month.  Beta expects punishment to last for two months after being caught i.e.,to be penalized in months 2 and 3).What would be the value-maximizing decision for Beta?

The Managers of Alpha and Beta Must Make Repeated Advertising