Two firms in a local market compete in the manufacture of cyberwidgets.Each firm must decide if it will offer a warranty or not.The pay-offs of each firm's strategy is a function of their competitor as well.The pay-off matrix is presented below. 
If firm #1 announces they will offer a warranty regardless of what firm #2 does,is this a credible threat? Why or why not?
Definitions:
Randomized Block Experiment
An experimental design that groups subjects based on certain characteristics to reduce variation in the response variable, with random assignment within blocks.
Within-Treatments Variation
The variability observed among individuals within the same group or treatment category in an experiment.
F-test
A statistical test used to compare the variances of two populations or to test the hypothesis that multiple population means are equal.
World Malaria Report
An annual publication by the World Health Organization that provides a comprehensive update on global and regional malaria data and trends.
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