The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.If Dunkin' Donuts is able to use a commitment device that commits them to expansion, then Starbucks should:
A)also expand.
B)not expand.
C)attempt to cooperate.
D)convince Dunkin' Donuts not to expand.

Question

The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.If Dunkin' Donuts is able to use a commitment device that commits them to expansion, then Starbucks should:
A)also expand. 
B)not expand. 
C)attempt to cooperate. 
D)convince Dunkin' Donuts not to expand.

Quizplus · Accepted Answer

The Answer of  The figure shown displays the choices that could be made by two coffee shops: Starbucks and Dunkin' Donuts. Both companies are trying to decide whether or not to expand into a new area. The area can only handle one coffee shop's expansion, and the expansion of one shop will cause the other to lose some business. If both coffee shops expand, the market will become saturated and neither will do well. The payoffs for these shops are the additional profits (or losses)they will earn.If Dunkin' Donuts is able to use a commitment device that commits them to expansion, then Starbucks should:
A)also expand. 
B)not expand. 
C)attempt to cooperate. 
D)convince Dunkin' Donuts not to expand.

The Figure Shown Displays the Choices That Could Be Made