The Managers of Alpha and Beta Must Make Repeated Advertising

question 14

Multiple Choice

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. Use the payoff table shown below to answer Questions .
$\begin{array} { l } &\text {Beta's advertising }\\ \text {Alpha's advertising }&\begin{array}{l|l|l|}& \text {High }& \text { Low }\\\hline High &\mathrm{A}&\mathrm{B}\\& {\$ 7,000, \$ 3,500} &{\$ 2,000, \$ 6,500} \\\hline Low &\mathrm{C}&\mathrm{D}\\&{\$ 8,000} \$ 1,000 & {\$4,000, \$ 2,000} \\\hline\end{array}\\\end{array}$
-Beta expects punishment to last for two months after being caught . What would be the value-maximizing decision for Beta?

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Definitions:

Task Interdependence

The extent to which the work or tasks of one member of a group or organization are dependent on the work or tasks of other members.

Forming

The initial stage in team development where group members come together and start to understand their roles and the task at hand.

Storming

A stage in team development marked by conflict and competition as team members work to establish norms and structures.

Team Cohesiveness

Reflects the bond that encourages members of a group to work together effectively, characterized by unity, trust, and a commitment to collective success.