Score: 0 of 1 pt 42 of 58 (39 complete) HW Score: 62.59%, 56.33 of 90 pts 14.3-1

Question

Score: 0 of 1 pt 42 of 58 (39 complete) HW Score: 62.59%, 56.33 of 90 pts 14.3-10 Question Help t (millions $ Odeon $17 RW $3. Accept Writer S30 Reject Odeon $12 RWS Odeon ofit (millions $ Odeon $14 RW $4.5 S40 Accept Writer t (millions $ Odeon $12 RW $2 Reject Rainbow Writer (RW) is a small online company selling a highly rated software package for engraving words onto objects produced by 3D printers. The firm currently earns a profit of $2 million per year selling its package exclusively on its website. Odeon, the producer of the most popular 3D printers has expressed interest in bundling Rainbow Writer's product with its printers. Odeon expects that bunding would further boost its sales and allow it to sell its printers at a higher price, thus raising its profits beyond its current profit of $12 million. The diagram above shows the decision tree for the Rainbow Writer-Odeon bargaining game. Refer to the decision tree above. How will Rainbow Writer respond to Odeon's two possible offers? Rainbow Writer will only accept an offer of $30 per copy of the software package. Rainbow Writer will only accept an offer of $40 per copy of the software package. Rainbow Writer will accept either offer Rainbow Writer will reject either offer O A. B, O C. D.

Explanation / Answer

14.3 - 10 B) Rainbow Writers will only accept an offer of $ 40 per copy of the software package.

Rainbow will accet $ 40 because it will give more payoff as compared to $ 30 offer.

39. C) Both choose Large.

Dominant strategy is a strategy for a player i.e. best response to all strategy profile of other player. If all players in a game have a dominant strategy then we say that Game has dominant strategy equilibrium.

Ann will get higher payoff by choosing Large boat irrespective of decision of Bob and vice-versa. So, both have dominant strategy of choosing Large Boat.

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