Figure 14-7
-Refer to Figure 14-7.Uniguest, Inc.is a company that provides PCs with internet access and touch-sensitive screens to hotels.Suppose the Hard Rock Hotel and Casino in Las Vegas informs Uniguest that it is considering installing these systems in its hotel rooms.The Hard Rock expects to be able to charge higher prices for these rooms if it installs Uniguest's systems in its rooms.The two companies begin bargaining over what price the Hard Rock will pay Uniguest for its systems, and the decision tree shown above illustrates this bargaining game.Note that the profit figures listed in the decision tree are additional profits for the Hard Rock and total profits for Uniguest.
a.Suppose the Hard Rock offers Uniguest $1,200 per system.Will Uniguest accept or reject this offer? Why?
b.Suppose the Hard Rock offers Uniguest $800 per system.Will Uniguest accept or reject this offer? Why?
c.Suppose Uniguest attempts to obtain a favorable outcome from the bargaining by telling the Hard Rock it will reject an $800-per-system offer.If the Hard Rock does not believe the threat is credible, what will it do? Why? What will Uniguest do? Why?
d.Is there a subgame-perfect equilibrium in this situation? Explain.
Definitions:
Prejudice And Discrimination
Prejudice involves preconceived negative judgments or attitudes toward a group or its members, while discrimination refers to actions against a group or its members based on these prejudices.
Aggressive Behavior
Actions or responses characterized by hostility or attack, whether physical, verbal, or symbolic, possibly resulting from frustration or threat.
Personal Experience
refers to events or encounters an individual personally goes through, shaping their perception and understanding of the world.
Primacy Effect
The Primacy Effect is a cognitive bias that results in a person recalling information presented at the beginning of a list better than information in the middle or end.
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