Sub-game perfect equilibrium question? 14.3-11Question HelpProfit (millions S)Odeon $17 RW $3.5AcceptRainbowWriter$30RejectProfit (millions $)Odeon $12 RW $2$40Profit (millions S)Odeon $14 RW $4.5AcceptRainbowWriterRejectProfit (millions $)Odeon $12 RW $2Rainbow Writer (RW) is a small online company selling a highly rated software package for engraving words onto objects produced by 3D printers. The firm currentlyearns 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 inbundling 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, thusraising its profits beyond its current profit of $12 million. The diagram above shows the decision tree for the Rainbow Writer - Odeon bargaining game.Refer to the decision tree above. What is the equilibrium outcome in this game and is this a subgame-perfect equilibrium?OA. In the equilibrium, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame - perfect equilibria.OB. Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame-perfect equilibria.O C. In the equilibrium, Odeon offers $40 per copy of the software package and is accepted but this is not a subgame - perfect equilibrium.D. Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame-perfect equilibria.Odeon

A payoff matrix is a method for communicating the consequence of players' decisions in a game. A…

Accept Reject Accept Rainbow Writer $30 Profit (millions $) Odeon $12 RW $2 $40 Profit (millions $) Odeon $14 RW $4.5 Rainbow Writer Reject Profit (millions $) Odeon $12 RW $2 is a small online company selling a highly rated software package for engraving words onto objects produced by llion per year selling its package exclusively on its website. Odeon, the producer of the most popular 3D printers ter's product with its printers. Odeon expects that bundling would further boost its sales and allow it to sell its prin Odeon

Accept Reject Accept Rainbow Writer $30 Profit (millions $) Odeon $12 RW $2 $40 Profit (millions $) Odeon $14 RW $4.5 Rainbow Writer Reject Profit (millions $) Odeon $12 RW $2 is a small online company selling a highly rated software package for engraving words onto objects produced by llion per year selling its package exclusively on its website. Odeon, the producer of the most popular 3D printers ter's product with its printers. Odeon expects that bundling would further boost its sales and allow it to sell its prin Odeon

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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