Scenario 13.16 Consider the Pricing Game Below

question 39

Multiple Choice

Scenario 13.16
Consider the pricing game below:
-Refer to Scenario 13.16. If Gooi can move first, and Ici threatens to buy yogurt machines, no matter what Gooi does,

• A) Gooi will have to buy gelato machines, so Ici will get its highest possible profit.
• B) Gooi will buy yogurt machines, which it otherwise wouldn't have, in order to retaliate.
• C) the equilibrium payoff of ($50,$50) will be enforced.
• D) Gooi will not change its behavior, because Ici's threat is not credible.
• E) Gooi will threaten to buy yogurt machines, no matter what Ici does, to see whether that will get the people at Ici to change their minds.

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Definitions:

Object Permanence

The understanding, typically developed in infancy, that objects continue to exist even when they cannot be observed or heard.

Sensorimotor Period

In Piaget’s theory, the period of cognitive development from birth to about 2 years, in which the child has not yet achieved object permanence.

Egocentrism

A cognitive bias that makes an individual unable to understand or assume any perspective other than their own.

A-not-B Effect

A cognitive phenomenon observed in infants where they repeatedly reach for an object at a place (A) where it was previously found, even after seeing it moved to a new location (B).