Consider again the sequential technology choice game in Technical Problem 13 in which Sony chooses its cell phone technology before Motorola. Motorola makes the most profit for itself if both firms choose analog technology for their cell phones. Motorola considers the following strategic moves:
a. Motorola makes the following threat before Sony makes its decision: “If you (Sony) choose Digital, then we will choose Analog.” Does this threat accomplish Motorola’s objective of getting both firms to adopt analog technology? Explain.
b. Motorola makes the following statement before Sony makes its decision: “If you (Sony) choose Analog, then we promise to choose Analog.” Is this a strategic promise? Why or why not? Does the statement accomplish Motorola’s objective of getting both firms to adopt analog technology? Explain.
