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Profit (millions $) Odcon S17 RW S3.5 Accept Rainbow Writer $30 Profit (millions $) Reject Odcon S12 RW $2 Odeon Profit (millions S) S40 Accept Odeon S14 RW S4.5 Rainbow Writer Reject Profit (millions S) Odcon $12 RW S2 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 prfit 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. 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? O A. Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame - perfect equilibria. 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, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame - perfect equilibria. O D. Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame - perfect equilibria,

Profit (millions $) Odcon S17 RW S3.5 Accept Rainbow Writer $30 Profit (millions $) Reject Odcon S12 RW $2 Odeon Profit (millions S) S40 Accept Odeon S14 RW S4.5 Rainbow Writer Reject Profit (millions S) Odcon $12 RW S2 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 prfit 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. 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? O A. Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame - perfect equilibria. 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, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame - perfect equilibria. O D. Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame - perfect equilibria,

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Profit (millions $) Odcon $17 RW S3.5 Accept Rainbow Writer $30 Reject Profit (millions $) Odeon $12 RW $2 Odeon Profit (millions $) $40 Accept Odeon S14 RW $4.5 Rainbow Writer Profit (millions S) Odcon $12 RW S2 Reject 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. 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? O A. Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame - perfect equilibria. O 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, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame - perfect equilibria. O D. Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame - perfect equilibria.
Transcribed Image Text:Profit (millions $) Odcon $17 RW S3.5 Accept Rainbow Writer $30 Reject Profit (millions $) Odeon $12 RW $2 Odeon Profit (millions $) $40 Accept Odeon S14 RW $4.5 Rainbow Writer Profit (millions S) Odcon $12 RW S2 Reject 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. 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? O A. Either offer of $30 or $40 per copy of the software package is accepted but these are not are subgame - perfect equilibria. O 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, neither offer is accepted as Rainbow Writer holds out for a better deal. The two rejection outcomes are subgame - perfect equilibria. O D. Either offer of $30 or $40 per copy of the software package is accepted and these two equilibria are subgame - perfect equilibria.
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