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Levi Strauss White Black Violet Levi Strauss and Wrangler are planning new generation jeans and must decide on the colors for their products

Economics Nov 25, 2020

Levi Strauss White Black Violet Levi Strauss and Wrangler are planning new generation jeans and must decide on the colors for their products. The possible colors are white, black, and violet. The payoff to each firm depends on the color it chooses and the color chosen by its rival, as the profit matrix shows. Suppose the firms move sequentially, with Wrangler moving first. Levi Strauss engages in pre-play communication (cheap talk). Levi Strauss tells Wrangler that it will match Wrangler's color choice if Wrangler chooses black and violet but that if Wrangler opts for white, Levi Strauss will choose Violet. Why would Levi Strauss want Wrangler to believe this claim? Levi Strauss would want Wrangler to believe this claim so that Levi Strauss could receive a payoff of $. (Enter your response as a whole number.) 10 30 40 White 10 20 30 Wrangler 20 0 35 Black 30 0 15 15 20 0 Violet 40 35 0

Expert Solution

Answer $ 40

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