Use the Following Setup

question 69

Multiple Choice

use the following setup
Consider a sequential game between a shopkeeper and a haggling customer.The party who moves first chooses either a high price ($50) or low price ($20) and the second mover either agrees to the price or walks away from the deal and neither party gets anything.Ignore costs and assume the customer values the item at $60.
-​Would the shopkeeper be able to convince the customer that he would usher the customer out if he gets a low price?

• A)​Yes,such threats are always credible
• B)No,because losing the sale is not in the shopkeeper's best interest
• C)No,because he would get more by accommodating the low price than losing the sale
• D)​Both B&C

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Odometer

An instrument used to measure the distance traveled by a vehicle.

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The real distance that a vehicle has traveled, as opposed to the distance indicated by an odometer, which can be inaccurate or tampered with.

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