Figure 14-3 Rainbow Writer (RW)is a Small Online Company Selling a Highly

question 143

Multiple Choice

Figure 14-3

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 bundling 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. Figure 14.3 shows the decision tree for the Rainbow Writer-Odeon bargaining game.
-Refer to Figure 14-3.What is the equilibrium outcome in this game and is this a subgame-perfect equilibrium?

• A)Odeon's offer of $40 per copy of the software package is accepted and this is a subgame-perfect equilibrium.
• B)In the equilibrium, Odeon offers $40 per copy of the software package and is accepted but this is not a subgame-perfect equilibrium.
• C)In the equilibrium, Odeon offers $30 per copy of the software package and is rejected, and this is a subgame-perfect equilibrium.
• D)There is no equilibrium in this game.

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Definitions:

Casual Today

The inclination towards adopting more informal and relaxed standards or approaches, particularly in contexts such as dress, communication, or workplace culture.

Reframing

A technique used to change the context or perspective on a situation or problem to see it in a new and different light.

Self-Talk

The internal dialogue that goes on within a person’s mind, which can influence feelings and behavior.

Visualization

Technique of imagining that you are performing a particular task in a certain way; positive visualization can enhance self-esteem.